I don’t have a fancy business degree, but I do know that it’s tough to keep a business closed for a year due to a pandemic. While major chains have been able to weather the pandemic, it looks like Alamo Drafthouse has now filed for Chapter 11. While that may seem dire on the surface, a read atVariety’s story seems more like this is an attempt to restructure the company and give it the capital it needs to continue operating.
The agreement involves Altamont Capital Partners, a previous investor in Alamo, along with affiliates of Fortress Investment Group. Variety reports that the agreement involves “the sale of substantially all its assets,” and 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.”
In a statement, CEOShelli Taylor, who became the company’s chief executive last April, said ““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,” adding that, “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.”
Related:AMC Theatres, Regal Cinemas Initiate ‘Social Distancing,’ Cut Theater Capacity in Half
So what does this mean for the average consumer? For starters, it means that your favorite location may shut down as we learned this morning that the Alamo’s downtown Austin location, The Ritz,will close permanently. But it’s premature to say that this is the end of the entire chain. Alamo has deep loyalty from its customers, and Taylor was brought in part because of her experience expanding Starbucks. I’ve said in the past that I don’t believe streaming is the future of moviegoing simply because we’ve lived through a year of that existence and it pales in comparison to the communal experience of going to a theater. If Alamo can get on the other side of this pandemic, I think they’re going to thrive because they’ve always shown how much they value that experience.
That being said, I’m deeply saddened for the employees that have been furloughed and now there may not even be a location to return to. The pandemic dealt all of us a bad hand, but some got it worse than others. I hope those employees will land on their feet sooner rather than later.
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