Alamo Drafthouse Cinema, the Texas-based theater chain that has become a favorite of moviegoers for its dinner service and fan-forward approach to exhibiting, has filed for Chapter 11. Filing for bankruptcy comes as part of an asset purchase agreement with Altamont Capital Partners, a former investor in the company, as well as affiliates of the Fortress Investment Group, a new financier. The company says operations will remain normal and the Chapter 11 process and the sale will give it the capital it needs to continue operating as it emerges from a public health crisis that has left many of its locations closed for months. The agreement involves “the sale of substantially all of its assets.”
Founder Tim League will remain involved with the company and is among the group of creditors who are buying the assets. League became executive president of the company in April, with Shelli Taylor, a former executive of Starbucks, assuming the role of CEO. Alamo Drafthouse operates in approximately 40 locations and is headquartered in Austin, Texas.
As part of the bankruptcy, Alamo Drafthouse will close some underperforming locations and restructure its lease obligations. The company is requesting the bankruptcy court to approve a 75-day deadline for the transaction process and the $ 20 million credit line for borrowers in charge led by Altamont and Fortress.
The coronavirus pandemic has decimated the exhibition business, with large studios postponing box office hits and cinemas closing for months. However, there are signs that it is recovering. Theaters may open in New York City from March 5, and exhibitors hope that Los Angeles will get movie buffs back, potentially setting the stage for a revival this summer as vaccinations increase.
Alamo Drafthouse has attracted loyal people with its themed exhibitions and fan events (such as weddings organized in “Star Wars” films), as well as its strictly enforced “not to speak” policy.
“Alamo Drafthouse had one of its most successful years in the company’s history in 2019 with the launch of its first theater in Los Angeles and box office revenue that surpassed the rest of the industry,” said Taylor in a statement. “We are excited to work with our partners from Altamont Capital Partners and Fortress Investment Group to continue on this path of growth on the other side of the pandemic, and we want to assure the public that we do not expect interruptions in our business or an impact on franchise operations, employees and customers in our locations that are currently operating. “