Alamo Drafthouse, the popular dine-in theater chain based in Austin, Texas, has filed for Chapter 11 bankruptcy and announced the closure of three of its locations.
The Chapter 11 bankruptcy filing would allow Alamo Drafthouse to get the money it needs to continue to stay open during the pandemic, KXAN reported.
As part of the bankruptcy, the chain will close three underperforming locations, including the flagship in downtown Austin, Texas, one in New Braunfels, Texas, and one in Kansas City, Missouri.
The chain will also permanently halt development on a future Alamo Drafthouse in Orlando, Florida.
All other locations will operate normally.
More closures could come as the theater chain evaluates the “health of all leases during the Chapter 11 process.”
Chief Financial Officer Matthew Vonderahe stated in court documents that social-distancing restrictions due to the pandemic, along with the delayed or straight-to-streaming release of films, annihilated Alamo Drafthouse’s ability to get paying customers in 2020.
“Not only were Alamo’s theaters shuttered to comply with months-long state and local government shutdown orders, but movie studios also have postponed the release of new content or bypassed theater releases in favor of streaming on media sites impacting operations and liquidity,” he said.
Alamo Drafthouse is the nation’s largest privately-owned chain with 41 locations in Virginia, New York, California, Texas, and other states.
As part of the bankruptcy, the chain has been sold to two private equity firms, Fortress Investment of New York and Altamont Capital of California, CBS News reported.