Shares in Cineworld (CINE.L) rose as much as 11% on Friday, before pulling back slightly, after a US court granted it access to $785m (£677m) funding.
The world's second-largest cinema chain filed for special bankruptcy in America this week to help it restructure $9bn of debt. The Chapter 11 proceeding came as a bid for more time to restructure its business.
The company, which owns brands such as Picturehouse and Regal, said the court decision will now allow it to meet ongoing obligations and pay staff wages.
Chapter 11 bankruptcies are different to other forms of declaring that a business has gone bankrupt. They mean the company will be able to hold on to all its assets and trade as normal for the time being.
Cineworld said it plans to emerge from bankruptcy in the first three months of next year.
Cinemas currently remain open globally to guests and members, and operations have continued without interruption.
It comes as a number of DC films including The Flash and Aquaman 2 have been pushed back to 2023 due to COVID production delays. Avatar: The Way of Water is also not set to premier until December this year after COVID-related issues delayed its release by over a year.
However, Tom Cruise’s Top Gun: Maverick, was one of the few major releases in the first half of 2022. It made £65.3m in the UK in June alone, and its worldwide gross has topped £1bn to date.
The firm has been struggling under its huge debt pile, which was exacerbated by the COVID-19 pandemic and the closure of cinemas around the world. It has also been hit by the success of streaming platforms, with new releases sometimes heading straight online instead of on the big screen.
Losses hit $3bn in 2020, and $576m in the first since months of last year, sending its shares spiralling. The stock is more than 86% down year-to-date.
The group was also previously ordered to pay Canadian rival Cineplex more than £700m in damages for abandoning a planned takeover. It was taken to court after it pulled out of a 2019 deal which would have seen it become North America’s biggest cinema operator.
The Canadian court ruling denied Cineworld’s counterclaim, citing breaches in the merger agreement. A legal fight over the damages is ongoing.
"Cineworld has been in a difficult cash position for some time and those problems have been amplified by poorly targeted CAPEX spending. In many ways, the debt load they’ve been burdened with over the last few years began with Cineworld’s acquisition of Regal,” Lara Martinez, analyst at Third Bridge, said.
"Our experts have raised questions over Cineworld's operations strategy in the US which coincided with a decline in market share. Here, in 2018 we saw a chain-wide recliner retro-fitting programme scrapped in favour of more extensive remodelling at a small number of core sites. It is questionable whether a U-turn at this stage would help market share."
She added: "Cineworld's Chapter 11 filing presents a chance to reorganise Cineworld's estate. The landlords that helped the cinema chain through COVID with flexibility on rental agreements will be closely watching the situation in case they lose out."