Alamo Drafthouse's franchises in Arizona have filed for Bankruptcy. The Arizona Republic got the announcement straight from Craig Paschich, the owner of the three venues. He hopes that they will eventually reopen, but that just isn't in the cards at the moment. Over in the corporate-owned theaters of the Austin, Texas chain, things are not quite as dire. Paschich is working with its corporate headquarters to figure out what the next steps will be, along with how to financially re-organize in the wake of the coronavirus pandemic. It's no shock that movie theaters, in particular, are feeling the pressure of this period of uncertainty. A lot of bigger chains have made their existential fears very clear.
Paschich told AZCentral, "I'm sad to confirm that due to the impact of the COVID-19 shutdowns, our three Alamo Drafthouse franchise locations in the Phoenix area have been forced to file for Chapter 11 bankruptcy protection. Our intention is to use this opportunity to reorganize our finances and plan for the road ahead. We're also currently working closely with the corporate team in Austin to determine our next steps. We've been privileged to have spent the past four years sharing the films we love with our friends in the Phoenix region, and we hope that taking these steps will put us on track to continue in the future."
Adam Stein-Sapir, a bankruptcy expert for Pioneer Funding LLC, a New York firm, told their publication that this was just too great a task, even for Alamo Drafthouse. If big operators like AMC Theatres are having trouble with the situation, then it makes sense that smaller entities would be struggling just to keep their heads above water. As things begin to reopen, there is still a lot of consternation around the idea of people staying away from large gathering spaces until a vaccine is developed.
"It's a hard business to just stop on a dime — you can't just cut all your expenses," he began. "The financials of these types of businesses are operating really on tight margins to begin with. You throw something like COVID in the mix and it just pushes them right over the edge… Even if you have a hit to sales it can impact them pretty significantly — but if you take all sales away, you can imagine the effect."
Will Alamo Drafthouse be able to bounce back? Let us know down in the comments!
Photo: Nick Simonite / Alamo Drafthouse