Dine-in cinema chain Alamo Drafthouse filed for bankruptcy Wednesday after taking a beating from the COVID-19 pandemic.
The Texas-based company said it plans to restructure itself after facing a “liquidity crisis” last year as the coronavirus shuttered its 18 corporate-owned movie theaters, which feature cushy seats and a menu of food and drinks.
The restructuring will reportedly see Alamo sell its assets to a group of lenders that includes existing investor Altamont Capital Partners, affiliates of Fortress Investment Group, and company founder Tim League.
Alamo plans to keep most of its theaters open after it emerges from bankruptcy, though it will close three underperforming locations in Texas and Kansas City and restructure its leases, according to reports. The chain also has 23 franchised cinemas in addition to its company-owned sites.
“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,” League said in a statement to news outlets.
Alamo’s bankruptcy is just the latest sign of the damage the COVID-19 crisis has inflicted on movie exhibitors around the world.
AMC, the world’s largest cinema operator, narrowly avoided bankruptcy this year after weathering heavy losses alongside rival Cinemark.
Alamo — which calls itself North America’s largest privately held movie theater business — outperformed its peers in 2019 and started last year in a strong position before COVID-19 forced it to shut down its cinemas by the end of March, according to its filings in Delaware bankruptcy court.
“As the national and local effects of the COVID-19 pandemic became the ‘new normal,’ revenue growth became impossible, and the company’s liquidity became seriously compromised by summer 2020,” chief financial officer Matthew Vonderahe said in a court declaration.
Alamo got some help from a $10 million Paycheck Protection Program loan and its Mondo merchandise business, but only six of its corporate theaters have been able to reopen at 50 percent capacity, Vonderahe said.
Alamo is known for enforcing a “zero-tolerance” policy against talking and cellphone use during screenings at its eat-and-watch cinemas. “We’ll kick you out, promise,” the chain says on its website. “We’ve got backup.”