Although AMC Entertainment Holdings (AMC -0.61%) got a $100 million lifeline last week, it still needs $750 million more to make it through next year. Some of its lenders are thinking it may not be worth it.

Three of its creditors are urging the theater operator to declare bankruptcy. If it agrees to do so, they will provide AMC with $1 billion of debtor-in-possession (DIP) financing. Such an arrangement allows the lenders to jump to the front of the line of all creditors who now control the company. 

It's a dual-edged sword, since filing for bankruptcy protection is supposed to give a business relief from its lenders as it reorganizes, but in AMC's case, it may not have the financial wherewithal to continue operations. DIP financing, on the other hand, gives it the money it needs, but the lenders would call the shots, even if management remains in place.

The sign of an abandoned cinema, against dark storm clouds.

Image source: Getty Images.

Taking control

AMC said in a regulatory filing it has held discussions with a number of its lenders and those who hold second-tier status are supporting the theater's efforts at arranging financing to continue as a going concern. Certain first-lien creditors, however, are pushing the bankruptcy option and are dangling the DIP financing as a carrot.

The New York Post identified Apollo Global Management (APO), Canyon Capital Advisors, and Davidson Kempner Capital Management as AMC's first-lien debtholders pushing the company to go the bankruptcy route.

Although they're already at the head of the creditor line, the deal would give them control over the theater operator while existing shareholders would likely be wiped out. The cinema owner said it expects discussions with all of its creditors to continue and intensify.