Alamo Drafthouse Files for Chapter 11

Alamo Drafthouse - AD Slaughter Lane_Austin TX -Publicity-H 2020
Courtesy of Heather Kennedy

The theater chain announced a deal to sell its assets to Altamont Capital and Fortress Investment Group as part of the bankruptcy filing.

Alamo Drafthouse, the independent theater chain known for its thematic screenings, fan-focused atmosphere and in-cinema food and drink options, is filing for Chapter 11 bankruptcy protection, according to a filing in Delaware Bankuptcy Court.

As part of the deal, Alamo is entering into a restructuring agreement, in which it will sell assets to affiliates of Altamont Capital and Fortress Investment Group. Tim League, one of the founders of Alamo Drafthouse and its executive chairman, will also be among the buyers. The deal will give Alamo access to incremental financing that the company says it hopes will allow it to make it past the pandemic.

The company says the operations of its open theaters will not be impacted while it undergoes the restructuring. Alamo Drafthouse operates about 40 theaters in the U.S.

The filing says that Alamo Drafthouse has estimated assets valued at between $100 million and $500 million, and estimated liabilities of between $100 million and $500 million.

Alamo is one of the most high-profile entertainment companies to file for bankruptcy amid the novel coronavirus pandemic. While the end of the pandemic is in sight as vaccines continue to roll out, theatergoing remains depressed, and many major releases have been delayed or pushed back.

Alamo's CFO said in a declaration tied to the bankruptcy filing that the move was made "in the face of an impending liquidity shortfall and significant industry headwinds primarily caused by the adverse impacts of the COVID-19 pandemic on the movie theater and dining industries."

League says in a statement, “Because of the increase in vaccination availability, a very exciting slate of new releases, and pent-up audience demand, we're extremely confident that by the end of 2021, the cinema industry — and our theaters specifically — will be thriving. We are fortunate to have an incredibly talented and passionate team who are eager to welcome our loyal fans back to our theaters for a cinematic experience that can’t be replicated. That said, these are difficult times and during this bankruptcy we will have to make difficult decisions about our lease portfolio. We are hopeful that our landlord and other vendor partners will work with us to help ensure a successful emergence from bankruptcy and viable future business.”