GRAND RAPIDS — Goodrich Quality Theaters Inc., a Grand Rapids-based chain of 30 movie theaters in five states, has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Western District of Michigan.
The company reported assets of $50 million to $100 million and liabilities of $10 million to $50 million, according to court records.
Belleville, Mich.-based Vistar Corp. is the largest unsecured creditor with a claim of $1.08 million, according to the filing. Other unsecured claims include Universal Film Exchange, $303,522; Sony Releasing, $224,570; Christie Digital Services, $203,013; and the real estate investment trust Spirit Master Funding X LLC for a total of $460,934 over four claims.
The company operates a chain of 30 movie theaters with 281 screens spanning Michigan, Indiana, Illinois, Florida and Missouri, according to its website. That includes West Michigan locations in Ada/Lowell, Grand Haven, Kalamazoo, Holland, Battle Creek, Hastings and Cadillac.
Bob Goodrich, owner of the closely held company, chalked up the company’s problems to a variety of factors, namely that streaming services such as Netflix have taken away audience for traditional movie theaters. As a result, business was down “not horribly” by 5-6 percent in 2019, he said.
“Without a clear crystal ball, I invested in remodeling five or six theaters and installed a new IMAX in Lafayette, Indiana,” Goodrich told MiBiz by phone today. “We’re struggling with the result of streaming taking our audience away. I misjudged and spent too much, and we’re left with a cash poor business. But I’m very optimistic we will come out of that.”
“We are still a cash flowing company, but it is inadequate to pay our bank debt,” Goodrich added. “We filed for Chapter 11 to try to resolve our issues. We are hopeful that will yet occur.”
Court records indicate that prior to filing for Chapter 11, Goodrich Quality Theaters retained an outside executive to serve as chief restructuring officer and hired investment banking firm Stout Risius Ross “to assist the Company in managing its finances and conducting a going concern sale process to preserve the value of its assets.”
The company terminated both relationships prior to filing.
On Feb. 24, Goodrich Quality Theaters defaulted on $29.58 million in loans, plus $99,577 in interest, to lenders CIBC of Grand Rapids, Holland-based Macatawa Bank and Grand Rapids-based Independent Bank, according to filings.
Court records indicate that, as owner, Goodrich guaranteed the company’s loans.
Judge Scott Dales approved CIBC to provide an emergency $402,430 debtor-in-possession loan to the company to cover its commitments to employees. Goodrich said the direct deposit funds went out on time to all of the company’s 1,250 employees.
CIBC conditioned the debtor in possession loan on the company re-engaging with the chief restructuring officer and investment banking firm, according to court records. The emergency loan was also contingent on the company agreeing to a 363 Sale.
Goodrich said Goodrich Quality Theaters owns 29 of the chains theaters, with another location owned by a separate entity. He expects to have to sell “some” locations in a bankruptcy auction process.
Goodrich Quality Theaters is represented in the case by Grand Rapids-based Law Offices of Tyrone Bynum PLLC. The three lenders are represented by Grand Rapids-based Varnum LLP.
A meeting of creditors is scheduled for 10 a.m. on March 24.