Chain has only $100,000 in cash assets.
Studio Movie Grill, a 33-unit chain that combines the movie-going experience with a full-service American grill menu, filed for bankruptcy.
Through the process, Studio Movie Grill said it wants to determine the profitability of each theater and renegotiate with landlords and the master licensing agreements with film studios. The company entered court proceedings with support from lenders who will provide debtor-in-possession financing.
“SMG seeks to use these mechanisms, in conjunction with a restructuring of other debt, to overcome this temporary downturn in the film industry and maximize future profitability,” said Chief Restructuring Officer William Snyder in the court filing.
The brand’s secured liabilities total roughly $104 million and its unsecured liabilities total about $231.1 million, including money owed under leases agreements, payments due to film studios in licensing fees, and accrued taxes. The brand has just $100,000 in current cash assets.
According to the court filing, in 2018 Studio Movie Grill was the fastest-growing company-owned theater chain and built the “largest hospitality-centric platform in the exhibition industry.” Prior to COVID, the concept had more than 25 years of year-to-year growth.
The pandemic effectively ended that progress, causing significant effects to not only Studio Movie Grill, but the entire movie industry, Snyder wrote.
State and local restrictions, along with a drop in demand, forced Studio Movie Grill to shut down for three months from March until June. As of now, 21 units are open with a limited capacity, but the supply of films has remained slim. In the face of declining sales, Studio Movie Grill has pushed to reduce operating and lease expenses and created new revenue streams like private theater rentals.
“Through its Chapter 11 Cases, SMG is but the next in a line of movie theater chains and other in-person entertainment businesses seeking bankruptcy relief,” Snyder said. “… It remains unknown how long the COVID-19 pandemic will persist and how long the market effects will continue thereafter. SMG anticipates that demand for its services will remain very tenuous until theaters are able to return to full capacity and major motion pictures resume being released for first-run theater showings.”
Studio Movie Grill was founded in 1993 to reimagine the traditional movie-going experience. The locations are fitted with a bar and lounge area, luxury recliners, advance sound systems, and a service button to allow waiters to know when consumers need to place an order.