Alamo Drafthouse Cinemas

THE JOINTLY ADMINISTERED DEBTORS

• Alamo Drafthouse Cinemas Holdings, LLC
• Alamo Aspen Grove, LLC
• Alamo Avenue B, LLC
• Alamo Cinema Group I, LP
• Alamo Cinema Group I GP, LLC
• Alamo City Foundry, LLC
• Alamo City Point, LLC
• Alamo DH Anderson Lane, LLC
• Alamo Drafthouse Cinemas, LLC
• Alamo Drafthouse Raleigh, LLC
• Almo Lakeline, LLC
• Alamo League Investment, Ltd.
• Alamo League Investments GP, LLC
• Alamo Liberty, LLC
• Alamo Mainstreet, LLC
• Alamo Marketplace, LLC
• Alamo Mission, LLC
• Alamo Mueller, LLC
• Alamo North SA, LLC
• Alamo Park North, LLC
• Alamo Ritz, LLC
• Alamo Satown, LLC
• Alamo Slaughter Lane, Ltd.
• Alamo Slaughter Lane GP, LLC
• Alamo Sloans, LLC
• Alamo South Lamar, LP
• Alamo South Lamar GP, LLC
• Alamo Staten Island, LLC
• Alamo Stone Oak, LLC
• Alamo Vineland, LLC
• Alamo Westlakes, LLC
• Alamo Westminster, LLC
• Alamo Yonkers, LLC
• Mondo Tees, LLC

DEBTORS SURVIVED BASED ON MERCHANDISE SALES

While the Debtors are most famous for their luxury, dine-in movie theaters with full cocktail meus, they also operate Mondo Tees, which handles licensed merchandise sales. The Debtors credit Mondo for supporting their cashflow throughout the pandemic. In fact, the Debtors say that, without Mondo, some landlord rent concessions, and the cooperation of their lenders, they would not have survived out of bankruptcy for so long.

Now that they are in bankruptcy, the Debtors disclose that they had approximately $112.7 million in secured debt. In addition to that, they have asked for permission from the Court to incur an additional $20 million in debtor-in-possession, or DIP, financing. That financing has been partially approved by the Court already.

While the Debtors have not yet released any information on the extent of their unsecured debt, they have disclosed that they anticipate having to repay some of their PPP loan. The Debtors received a Paycheck Protection Program, or PPP, loan from the government’s CARES Act program in the amount of $10 million. The Debtors state that they have applied for “partial loan forgiveness” but have no elaborated on how much they expect to be forgiven versus how much will need to be repaid. Any portion of the loan that is not forgiven will be unsecured debt.

THE SALE OF ALAMO DRAFTHOUSE

Through the bankruptcy, the Debtors hope and intend to sell substantially all of their assets. When the case is done, the Alamo Drafthouse name will continue under new ownership. Of course, not all locations will feel the effects. Alamo operates 18 theaters itself, but franchisees operate an additional 23 locations. The bankruptcy does not affect franchised locations.

The Debtors have set an ambitious timeline for their proposed sale. They hope to close a sale within 75 days of filing for bankruptcy. In order to accomplish a sale in this timeframe, the Debtors have entered into a stalking horse agreement with the pre-petition and DIP lender. The stalking horse agreement provides for the DIP lender to buy the assets unless it is outbid. It also provides the DIP lender with certain benefits in the event that it is outbid.

Importantly for unsecured creditors, the proposed sale would have the lenders acquire the Debtors’ assets but not all of its liabilities. If the stalking horse bidder is the successful purchaser, they propose to leave only $250,000 in cash in the estate to pay unsecured claims. This will undoubtedly cover only a tiny portion of the unsecured claims against the Debtors. If unsecured creditors want to bargain for better treatment, the best way is to form a Committee of Unsecured Creditors and retain competent counsel. However, individual creditors are also entitled to representation. When faced with a proposal such as the Debtors’ counsel is recommended for all creditors.