Alamo Drafthouse Files For Chapter 11 Bankruptcy Protection
Austin-based theater chain Alamo Drafthouse Cinema has voluntarily filed for Chapter 11 bankruptcy protection, one of the first theater groups to do so amid severe financial troubles for the industry in the wake of the coronavirus pandemic.
As part of the restructuring, Alamo Drafthouse has entered into an agreement that will involve selling assets to affiliates of Altamont Capital Partners and Fortress Investment Group.
The firm has already announced that it will close three theaters: New Braunfels and the original downtown Austin location in Texas, as well as the theater in Kansas City, Missouri.
“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,” Alamo Drafthouse CEO Shelli Taylor said in a statement. “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.”
Under Chapter 11, Alamo Drafthouse will be able to continue operating as it reorganizes the business. The firm filed for bankruptcy protection in Delaware Bankruptcy Court.
Alamo Drafthouse was founded in 1997 by Tim League and his wife, Karrie League. The theater chain became famous for serving dinner and drinks during screenings and holding special events to celebrate popular movie releases.
Prior to the pandemic, the chain operated around 40 cinemas across the U.S., with plans to build more. Alamo Drafthouse closed its doors in March last year in response to the pandemic, and it reopened some of those locations at the end of the summer.
The firm brought on former Starbucks executive Taylor as CEO in April, while founder Tim League moved into the role of chairman of the board of directors.
Cash-strapped cinema chains have been facing a difficult battle over the past year, amid stringent lockdowns, ongoing occupancy limits and fearful public sentiment. Though many chains, including AMC Theatres and B&B Theatres, have flirted with bankruptcy, most have managed to avoid filing thus far. Revenues for the largest U.S. cinema chains that do survive the carnage may not see recovery until 2024.
