Alamo Drafthouse Cinema, the Texas-based theater chain that has become a favorite with cinephiles for its dine-in service and fan-forward approach to exhibition, has filed for Chapter 11. The bankruptcy filing comes as part of an asset purchase agreement with Altamont Capital Partners, a previous investor in the company, as well as affiliates of Fortress Investment Group, a new backer. The company says that operations will continue as normal and the Chapter 11 process and sale will give it the capital it needs to continue operating as it emerges from a public health crisis that left many of its locations closed for months. The agreement involves “the sale of substantially all its assets.”
Founder Tim League will remain involved with the company and is among the lender group buying the assets. League became the company’s executive chairman in April, with Shelli Taylor, a former Starbucks executive, assuming the role of CEO. Alamo Drafthouse runs roughly 40 locations and is headquartered in Austin, Texas.
As part of the bankruptcy, Alamo Drafthouse will close down a few underperforming locations and restructure its lease obligations. The company is requesting that the bankruptcy court approve a 75-day timeline for the transaction process and the $20 million debtor-in-possession credit facility led by Altamont and Fortress.
The coronavirus pandemic has decimated the exhibition business, with major studios postponing blockbusters and theaters remaining shuttered for months. However, there are signs it is rebounding. Cinemas can open in New York City starting on March 5 and exhibitors expect that Los Angeles will soon welcome back moviegoers, potentially setting the stage for a revival this summer as vaccinations increase.
Alamo Drafthouse has attracted loyalists with its themed screenings and fan events (such as staged weddings timed to “Star Wars” movies), as well as its strictly enforced “no talking” policy.
“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,” 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.”