Alamo Drafthouse Cinema, a popular dine-in movie theater chain with over 40 locations across the U.S., has declared Chapter 11 bankruptcy. The Austin-based company's debt currently totals about $114 million, and as of Wednesday, it has entered into a provisional agreement to be purchased by its primary lenders, Altamont Capital and Fortress Investment Group.
In addition, Alamo has announced the permanent closure of three underperforming locations: its venue in Austin—a 90-year-old cinema known as the Ritz—as well as theaters in Kansas City, Mo. and New Braunfels, Texas. (Related: McDonald's Is Making These 8 Major Upgrades.)
The restaurant-cinema hybrid company, founded in 1997 by Tim and Karrie League, had enjoyed a particularly successful 2019, which brought competitive box office sales and a new location in Los Angeles. Like other major companies in the hospitality and entertainment industries, however, Alamo's operations were significantly impaired by the COVID-19 pandemic and resulting lockdowns. It was forced to close all of its locations in March, and it did not begin to reopen theaters until late in the summer.
Throughout the pandemic, the company moved quickly to shore up its expenses and create new sources of revenue. It furloughed much of its staff and reduced the pay of its corporate and theater-level employees. It also offered private screenings and developed a streaming service for its licensed titles.
But it never quite managed to right itself. By the time of the general reopening of its theaters in the summer, the chain's liquidity was "seriously compromised," according to Matthew Vonderahe, Alamo's CFO. By November, the Austin Alamo Drafthouse faced a $1 million lawsuit, for failure to pay rent and other expenses.
While the chain remains hopeful about its future, whether customers will return to these types of establishments as the pandemic starts waning is yet to be seen. For more on famous fast-food chains that recently underwent bankruptcy, check out 10 Biggest Restaurant Chain Bankruptcies of 2020.
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