It’s been a rough year for the movie theater industry and, as the coronavirus pandemic reaches lockdownaversary for many, the consequences of a year of isolation and restrictions are starting to add up. Closures and bankruptcy have seemed inevitable and, on Wednesday, trouble came looking for the extremely popular Alamo Drafthouse Cinema.
The boutique theater company announced it would declare Chapter 11 bankruptcy and also be sold to an investment group, putting the Texas-based company in new hands as it hopes to emerge from bankruptcy in a post-pandemic life where people are more willing to return to the movies.
According to Variety, the one-two punch of troubling news for the chain ravaged by COVID-19 restrictions and a movie industry that’s largely punted on major releases for a calendar year added up to a situation impossible to overcome.
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.
“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.”
The news is tough to hear for movie fans, especially those who loved the Alamo Drafthouse moviegoing experience. Themed events, more substantial food and drink options, and luxurious seating are a huge draw of the company’s 40 theaters across the US, and the ripple effect of Drafthouse’s success had seen similar features pop up at other chains like AMC and Regal.
Unlike AMC, however, the company didn’t get a retail stock boost from Redditors, which may end up saving that company from a similar financial situation. It’s one of the reasons why many are taking this news hard, as smaller, cooler, and more niche businesses like this are often the first to feel the effects of a tricky economic situation. It’s not great.
The @AlamoKC Main Street Theater closing is the latest gut punch. As someone who spent hundreds of hours behind the scenes to see the building saved and reopened, this is painful. I honestly can’t help but feel like #KC is regressing on many fronts. 😥https://t.co/cVMuNSDnT0
— Jon Stephens (@RockhillStrat) March 3, 2021
Basically, anyone who likes going to the movies hopes that, as vaccines continue to go into arms and the pandemic is brought more under control, people return to the movies. But it will be a long, slow process for sure. One that’s already seen theater options dwindle while people and big releases largely stay away from the big screen.