Studio Movie Grill emerges from Chapter 11 bankruptcy
By Catherine Leffert - Staff Writer, Dallas Business Journal
Apr 21 , 2021
Studio Movie Grill has exited bankruptcy, it announced Wednesday, after filing for Chapter 11 in October due to effects of the COVID-19 pandemic.
In its Wednesday announcement, the Dallas-based , dine-in movie theater chain said that as it emerges from bankruptcy, it's still operating 17 locations in five states, with plans to open two more in other states in the next six weeks. It operated 34 locations in 10 states prior to the pandemic. The company will also complete construction later this year on a 14-screen location in Georgia.
Addition ally, CFO/COO Ted Croft, who's been at the company for a decade, will take over as chief executive, replacing founder and former CEO Brian Schultz. According to the release, Croft has secured funding for the theater's growth since 2011 and will now lead its profitability and sustainability as CEO.
"This has been a challenging time for the industry and the brand;' Croft said in a prepared statement. "It's a testament to Studio Movie Grill's founder, team members and our other stakeholders, that we're standi ng here today delivering a best in-class experience to folks getting out of their homes and safe l y back into theaters."
It announced in January its Plan of Reorganization, which was approved at the end of March. The plan provided a creditors' trust to manage liquidation of some assets and handle the company's $50 million of contingent and non-contingent general unsecured debt. The petition for the bankruptcy was filed in the U.S. Bankruptcy Court for the Northern District of Texas in Dallas. At the time of the filing, Studio Movie Grill listed assets between $50 million to $100 million and liabilities between $100 million to $500 million.
Former CEO Schultz, who founded the company in 1993 , told the Business Journal in January that throughout the pandemic, Studio Movie Grill was trying to survive, revive and thrive, which filing for Chapter 11 facilitated. He said earlier this year that the whole process was "an emotional rollercoaster," but necessary to save more jobs and make the company more sustainable. Chapter 11 allowed the company to reset, especially as Hollywood studios weren't releasing as many films, which decimated the industry, Schultz said.
"I kept on holding out hope that more films were going to be distributed," Schultz said. "As more and more movies fell off the schedule, it becan1e inevitable. Our decision ,vas to file (for bankruptcy) as early as possible so that we can emerge as quickly as possible."
In 2020, domestic box office totals dropped more than 81 percent to $2 billion from $11.3 billion in 2019. Year-to-date, 2021 totals are already down 81 percent from 2020, and 87 percent from 2019.
Studio Movie Grill was advised by the Law Offices of Frank J. Wright PLLC, CR3 Partners, EFA Partners and Keen-Summit Capital Partners. The company's lenders, affiliates of Goldman Sachs and Crestline Investors, will provide debt financing in exchange for equity in Studio Movie Grill. Those lenders were represented by Vinson & Elkins LLP and Jones Day, respectively, and FTI Consulting Inc.