Texas-based Alamo Drafthouse Cinema filed for Chapter 11 bankruptcy after facing huge economic losses due to the COVID-19 pandemic.
Alamo Drafthouse Cinema has decided to file for bankruptcy to prevent its chain of dining rooms from facing permanent closure in the wake of the COVID-19 pandemic.
The bankruptcy filing was made as part of an asset purchase agreement with the company’s previous investor, Altamont Capital Partners, according to Variety. The presentation was also agreed upon by Fortress Investment Group, a new sponsor of the dinner theater brand.
Although the agreement involves “the sale of substantially all of its assets”, Alamo Drafthouse Cinema insisted that the operations of its chain of cinemas will continue as normal. The company clarified that the Chapter 11 process and sale were necessary for the company to recover capital, following the financial setbacks caused by the ongoing COVID-19 pandemic.
“Alamo Drafthouse had one of its most successful years in company history in 2019 with the launch of its first theater in Los Angeles and box office revenues that surpassed the rest of the industry,” shared the Alamo Drafthouse CEO, Shelli Taylor, in a public statement. “We are excited to work with our partners at Altamont Capital Partners and Fortress Investment Group to continue on that growth path on the other side of the pandemic,” he added. “And we want to assure the public that we do not expect any disruption to our business and any impact on franchise operations, employees and customers at our currently operating locations.”
As part of filing for bankruptcy, Alamo Drafthouse will close some of its locations and restructure current leasing obligations. The company also asked the bankruptcy court to approve a 75-day timeline for the transaction process and the $ 20 million debtor line of credit, which is run by Altamont and Fortress.
The Alamo Drafthouse presentation comes about a week after the CEO of the Cinemark theater chain expressed hope that its California theaters will open in time for the summer blockbuster season. “We are optimistic that we will be able to relight these cinemas this summer,” said Cinemark CEO Mark Zoradi.
Founded in 1997 in Austin, Texas, Alamo Drafthouse made a name for itself by offering full service food and beverage, including alcoholic beverages, within its theaters. Before the closings that will occur as part of filing for bankruptcy, the company had 41 locations in the United States, including 21 in Texas.
When theaters began closing due to the pandemic in 2020, the Alamo Drafthouse launched the “Alamo-At-Home” initiative, which included virtual movie screenings. The company followed this initiative by launching its Alamo on Demand VOD service, a platform created in partnership with ScreenPlus and Vista Cinema, which features content ranging from blockbusters to indie gems.
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