AMC’s (NYSE:AMC) AMC Entertainment Preferred Equity Unit (NYSE:APE) shares are trending on social media and fell today after a Delaware judge on Friday rejected AMC’s plans to convert the preferred shares into common stock. The movie theater owner is floating a new plan for APE stock, but for now, it seems that investors are losing faith. Earlier this morning, there was a brief rally that caused APE stock to briefly turn positive before returning to negative territory at the time of writing.

However, AMC’s common stock is surging 20% this morning on the news.

The Judge’s Ruling

The judge refused to allow AMC to carry out its plan to convert $129 million of its APE stock to common shares. Presented as part of a settlement between APE and shareholders suing AMC, the deal waived too many claims against the movie theater owner, the judge decided. Over 2,800 of AMC’s investors had asked the judge to reject the settlement.

The CEO’s Comments

AMC CEO, Adam Aron, announced the revised plan in an open letter that he published yesterday on Twitter. He did not disclose any details about the modifications to the deal, but he said they were made “in an effort to address the Court’s voiced concern.”

More importantly for the owners of APE stock and AMC stock, Aron suggested that the company “could run out of cash in 2024 or 2025” if the deal is not implemented.

Aron added that the writers’ and actors’ strike has increased the “uncertainty” facing AMC  because the work stoppages could delay movies due to be released in 2024 and 2025. The CEO wrote that “AMC must be in a position to raise equity capital.”

The Performance of APE Stock

In the five trading days headed into today, APE had fallen 4%. However, they have gained 5% in the last six months.

APE stock is still up almost 50% year-to-date (YTD).

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.