Austin, Texas-based, dine-in movie theater chain Alamo Drafthouse Cinema has filed for voluntary Chapter 11 in Delaware Court and agreed to sell basically all its assets to an investor group including one of its founders Tim League.
The exhibitor, which buckled under the impact of Covid-19, has 37 theaters including locations in LA, Brooklyn and northern Virginia. It’s backed by Altamont Capital. The sale is to Altamont, funds managed by affiliates of Fortress Investment, League and other original investors. The transaction will provide much-needed financing to stabilize the business.
The first Alamo Drafthouse Cinema was founded in 1997 as a single-screen mom and pop repertory theater in Austin. In May, the Phoenix-based franchises of Alamo Drafthouse in Tempe, Gilbert and Chandler filed for bankruptcy.
The parent company bankruptcy makes it one of the highest-profile casualties of the pandemic that shuttered theaters a year ago. Cinemas has seen sporadic reopening often at limited capacity across the country and a meager offering of films as studios postponed releases. The move comes as a vaccine rollout holds out hope for a turnaround and key markets, like New York and San Francisco, are reopening.
The nation’s largest chain, AMC Entertainment, skirted close to bankruptcy several times but has managed to raise enough cash to see it through this year and a more robust return to moviegoing.
In connection with the Chapter 11 filing, the company is requesting the Bankruptcy Court approve a 75-day timeline for the transaction process and a $20 million debtor-in-possession credit facility with the senior lender group keep the business running.
It will close three theaters, Alamo Drafthouse Ritz in Austin, and locations in Kansas City, Missouri and New Braunfels, Texas, and stop development at a cinema in Orlando. Other theaters will continue operating but company said it will continue to evaluate the health of all leases during the Chapter 11 process.
“Alamo Drafthouse had one of its most successful years in the company’s history in 2019 with the launch of its first Los Angeles theater and box office revenue that outperformed the rest of the industry,” says CEO Shelli Taylor. “We’re excited to work with our partners at Altamont Capital Partners and Fortress Investment Group to continue on that path of growth on the other side of the pandemic, and we want to ensure the public that we expect no disruption to our business and no impact on franchise operations, employees and customers in our locations that are currently operating.”
Just last night, the company sent out a statement affirming that its Covid-19 protocols remain in place in Texas despite the state’s decision to end its mask mandate and open up businesses to 100% capacity.
“Alamo Drafthouse’s mandatory mask policy remains in place, as well as our 6′ social distancing protocols, and all of the other safety measures we’ve had in place across the country since last year. We are only following the guidance of the CDC and medical experts, not politicians. Right now, at what we hope is the beginning of the end of COVID, the health of our teams and our guests remains this company’s top priority.”