Unlike a Chapter 7 bankruptcy, which governs a liquidation of assets, Chapter 11 requires the bankrupt entity to propose a reorganization that will allow it to pay back its creditors over time. As part of its restructuring agreement, Alamo Drafthouse will sell assets to affiliates of Altamont Capital and Fortress Investment Group. It’s not clear what that will look like, or which assets will be sold. But many Alamo Drafthouse theaters are expected to remain open.
The deal also includes incremental financing that Alamo says will be enough to get it through the pandemic. Tim League, executive chairman and co-founder of Alamo Drafthouse, will be one of the buyers.
“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. “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.”
With 41 locations across the US, including 21 in Texas, Alamo Drafthouse built its reputation by emphasizing the customer experience. Its recent brush with insolvency won’t change those core values, and that extends to coronavirus hygiene. After Texas governor Greg Abbott lifted the statewide mask mandate and allowed businesses to open at 100% capacity, Drafthouse’s Texas locations would be able to host full-capacity screenings, but they have no intention of doing so. In a statement, the cinema chain reitterated its commitment to following CDC guidelines. They wrote,
“Alamo Drafthouse’s mandatory mask policy remains in place, as well as our 6′ social distancing protocals, and all of the other safety measures we’ve had in place across the country since last year. We are only following the guidance of the CDC and medical experts, not politicians. Right now, at what we hope is the beginning of the end of COVID, the health of our teams and our guests remains this company’s top priority.”
Earlier in the pandemic, when cases remained high in Texas, Alamo Drafthouse remained closed despite Governor Abbott’s decision to re-open the state. The theaters had previously tried to generate income by unveiling the “Alamo-At-Home” streaming program and allowing guests to rent out an entire theater.
Editor’s note: We’re offering a free two-pack of black face masks with the purchase of any premium mask pack. Proceeds from each sale benefit independent musicians and venues impacted by the pandemic through charities such as MusiCares and NIVA.
— Alamo Drafthouse (@alamodrafthouse) March 3, 2021