VIP Cinema Holdings Inc., a private equity-backed maker of reclining seats for movie theaters, filed for bankruptcy with a restructuring plan backed by creditors that include Oaktree Capital Management LP, WSJ Pro Bankruptcy reported. The St. Louis-based company and four affiliates will slash more than $150 million in debt from their books through the chapter 11 proceedings, Michael Blatz, who was hired as chief executive about 18 months ago. The company expects to emerge from bankruptcy with less than $70 million in debt, he added. VIP Cinema’s biggest shareholder is H.I.G. Capital. The private-equity firm, which has more than $35 billion under management, invested in VIP Cinema in 2017, saying it saw “tremendous opportunities in the business,” particularly internationally. Demand for the company’s flagship product is reaching a saturation point, with many movie theaters already having installed at least some reclining seats. That has resulted in manufacturers like VIP Cinema seeing fewer opportunities to sell recliners, particularly because the number of movie screens in the U.S. has remained relatively flat, Blatz said. Pressure on the movie-theater industry, caused partly by the proliferation of online streaming services, also has caused some exhibitors, including AMC Theatres, to reduce capital expenditures, VIP said. The company said its profit margins also have deteriorated significantly because of an increase in raw material costs and higher tariffs.
