Alamo Drafthouse enters Chapter 11 bankruptcy
Alamo Drafthouse is a chain business based in Texas that is a combination of a restaurant and movie theater. This makes for a unique experience, which has led to the opening of multiple locations, but it appears that not all of those will stay open.
Due to financial pressures in the current economy, the company is filing for Chapter 11 bankruptcy.
Is this the end for Alamo Drafthouse?
This is not the end for the business. The goal of Chapter 11 is to restructure the financial situation so that it can continue. The company hopes to get things in order and raise capital to keep most locations open.
That doesn’t mean every location will make it, as Alamo Drafthouse has spread from its roots in Texas to include nine other states. There are 41 locations in all. At least three “underperforming locations” are going to close, and one that was being built in Florida is now being called off. Reports say that the company plans to restructure the leases that it holds — and other contracts besides — so that it can rebound. This means cutting off some of the locations in hopes that the restructuring will let the brand endure.
How bankruptcy really works for businesses
When many people hear that a business is filing for bankruptcy, they often assume that means it is going under and will cease to exist. Most of the time, that is not how it really works. As this example shows, restructuring is popular and can protect a company, even when some trimming is still needed. Business owners must understand how they can use bankruptcy to their advantage.