NEW ALBANY – VIP Cinema Seating, the largest maker of luxury reclining seats for movie theaters, filed for Chapter 11 bankruptcy protection, Reuters reported.
The move will help preserve 373 jobs, the company said. It hopes to emerge from bankruptcy by mid-April.
VIP, which was founded in 2008, has grown to become the largest provider of the chairs with 70% of the market. But it said it had been hurt by a slowdown in the number of screens, a drop in box office sales and a longer replacement cycle of the chairs.
VIP chairs are familiar to Northeast Mississippi moviegoers. The company replaced the seating in the Malco and Cinemark theaters in Tupelo in 2017 and 2018. The Malco project alone was valued at nearly $1 million, as it replaced 1,745 seats to 1,012 reclining seats in its 10 auditoriums. Cinemark replaced 1,384 seats to 613 for its eight auditoriums.
Replacing seating at theaters costs around $500,000 or more, depending on the size of the facility.
H.I.G. Capital, a Miami-based private equity firm, invested $62.5 million in VIP in 2017 and bought out its former owners. The company said it had sold more than 1 million chairs.
With the growth of luxury theater seating, VIP added manufacturing capacity and workers, adding another 160,000 square feet of manufacturing space in 2016, and its total footprint is now 900,000 square feet. The company at its peak employed more than 550 people in New Albany, where they could produce up to 1,000 chairs a day.
But according to Reuters, Chief Restructuring Officer Stephen Spitzer said the premium recliner market had by 2017 “reached a near saturation point” following theater upgrades, and the number of new screens has since remained “relatively flat.”
Spitzer also said the company's belief that theaters would replace chairs sold and installed in 2012 and 2013 was incorrect, as movie attendance has fallen and theater companies would extend the replacement cycle.
Domestic box office sales fell to $11.45 billion last year, down from a record $11.88 billion in 2018.
H.I.G. manages more than $35 billion in equity capital, according to its website.