Alamo Drafthouse Files for Chapter 11 Bankruptcy Protection, Closes Ritz
Firm pledges to continue operations at all remaining sites
By Richard Whittaker,
10:30AM, Wed. Mar. 3, 2021
A huge blow and a potential for hope for fans of the Alamo Drafthouse this morning: The Austin-based cinema chain filed a voluntary chapter 11 filing with the United States Bankruptcy Court for the District of Delaware, and will be closing multiple locations, including the beloved Ritz in Austin.
Sources close to the Drafthouse had suggested in recent months that the firm was looking to restructure its debt, and in the filing the Alamo Drafthouse LLC told the court that it had entered into an asset purchase agreement with Altamont Capital Partners (with whom they already have a long-standing relationship), funds managed by affiliates of Fortress Investment Group LLC, and founder/executive chairman Tim League.
This is the latest measure in attempts to keep the Drafthouse going. It announced furloughs and lay-offs last July, as part of a swathe of cost-cutting measures, while League sold off his personal collection of prints from the Drafthouse's print and merch arm, Mondo, to help cover some costs. However, unlike many Chapter 11 filings, the new arrangement means the Drafthouse has the refinancing lined up. Spokespeople for the Drafthouse stressed that this means the chain will continue all operations at all remaining 38 locations, as well as the continued operations of Mondo, the recently-revived Drafthouse Films, and VOD platform Alamo on Demand.
The step comes after the Drafthouse had one of its most successful years ever in 2019, with the launch of its long-awaited Los Angeles location. However, as for any business, 2019 was no indicator of 2020 and the pandemic closure. The Drafthouse was one of the first chains to shut its cinemas, and has kept many of them dark, while those that have reopened have run on reduced capacity and with few big releases to attract even limited audiences.
Alamo Drafthouse CEO Shelli Taylor said, “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.”
League said that he was optimistic that the industry will rebound by the end of 2021. “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.”
Part of the filing will be the capability to shed "nonviable locations." The list today mean the closure of the scandal-wracked Kansas City site, the New Braunfels Drafthouse, and Austin will lose the beloved Ritz on Sixth Street.
This morning, the Drafthouse announced in a statement that its second downtown location, the successor to the first Drafthouse site on Colorado, will not re-open after it shut due to the pandemic last March. In its 13 years of operations, the historic theatre hosted many of the Drafthouse's signature programs like Terror Tuesday and Weird Wednesday. However, it also provided a vital component to Austin's festival infrastructure, providing a regular screening and event venue for SXSW. Austin Film Festival, and ATX Television Festival.
The Drafthouse's departure raises questions about the future of the historic venue, which opened in 1929 as the Ritz, the first Austin cinema designed specifically for the talkies. Since then, it has been an adult theater, a a music venue, a theatre, an adult cinema again, a punk club, before finally being restored as a cinema by the Drafthouse in 2007.