Austin-based Alamo Drafthouse Cinemas filed for Chapter 11 bankruptcy protection in Delaware federal court Wednesday morning.
The movie theater chain — known as a pioneer for the dine-in-theater experience — is the latest indoor, consumer-oriented business to fall prey to the financial woes of the Covid-19 pandemic. The company follows suit of competitor Studio Movie Grill, which filed for Chapter 11 in October.
A group of Delaware lawyers from Young Conaway Stargatt & Taylor are leading the company’s reorganization.
Alamo Drafthouse entered its bankruptcy with a restructuring support agreement that entails selling essentially all of its assets to Altamont Capital, Fortress Investment Group and a group of minority investors. The RSA also includes a $60 million DIP facility with its prepetition secured lenders, which include Texas Capital Bank, Bank of America, Truist Bank and Keybank National Association.
Locke Lord’s Jack Jacobsen and McGinnis Lochridge’s Ed McHorse are the first Texas lawyers to appear on the public record in the corporate restructuring. They represent a group of minority investors, which includes Drafthouse founder and executive chairman Jim League and Dave Kennedy, a Boulder, Colorado-based media investor who is an owner and board member of Alamo Drafthouse and a co-founder of the predecessor company to Match.com.
Alamo Drafthouse is currently the largest privately-held movie theater business in North America. It is located in 22 markets and has 18 company-operated theaters and 23 franchise-operated theaters.
The Drafthouse appeared to try everything it could to reinvent, readjust and craft creative business solutions to stay afloat during the pandemic. Although it had to lay off employees, the company also created a Covid-19 relief fund, tapped a former Starbucks executive as its new CEO, launched a streaming platform and moved its signature film festival to a primarily digital format, the Austin American-Statesman reported.
The silver lining is that a company owned by one of the investors purchasing Drafthouse’s assets, Fortress Investments, just won a $2.175 billion jury verdict in a patent infringement case.
The case is 21-10474-MFW in the U.S. Bankruptcy Court for the District of Delaware.