Due to the bankruptcy, the company will be closing some of its locations and restructuring its lease obligations
alamo draft house
Credit: Cooper Neill/Bloomberg via Getty

The COVID-19 pandemic continues to take a toll on the film industry.

On Wednesday, the Texas-based Alamo Drafthouse Cinema filed for Chapter 11 bankruptcy. The filing was part of an asset purchase agreement with Altamont Capital Partners and Fortress Investment Group, which involved "the sale of substantially all its assets," Variety reported.

With the bankruptcy, the company will be closing a number of its underperforming locations and restructuring its lease obligations. Alamo Drafthouse operates roughly 40 locations, with its headquarters in Austin, Texas.

"Alamo Drafthouse had one of its most successful years in the company's history in 2019 with the launch of its first Los Angeles theater and box office revenue that outperformed the rest of the industry," CEO Shelli Taylor said in a statement. "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."

Amid the bankcruptcy, the cinema's founder, Tim League, will remain involved with the company.

At the start of the pandemic, movie theaters were forced to close in an effort to help stop the spread of COVID-19. The two biggest movie theater chains in the U.S., AMC and Regal Cinemas, reopened in many areas months later and enforced new guidelines regarding social distancing and reduced capacity.

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Hollywood studios have continued to postpone the releases of some of its high-profile blockbusters or switch to a digital rollout as a result of the pandemic closures.

In October, Regal Cinemas — the second-biggest movie theater chain in the country, behind AMC — announced it would temporarily shut down all of its 536 locations in the United States. The business move affected nearly 40,000 U.S. Regal employees.

In February, New York Governor Andrew Cuomo announced that the city is approved to open movie theaters at 25% capacity on March 5, with a cap of 50 people per screening.

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