KENTWOOD, MI — After nine decades in business, Goodrich Quality Theaters has filed for bankruptcy, a move that will likely see the company sell off most of its 29-theaters to pay off $30 million in debt.
“I’m in the process of trying to sell assets to pay my creditors,” said company President Robert Goodrich, 79. “The big question is, what would be the sales price? That is obviously a concern because in bankruptcy the value of the company has been deteriorated.”
Kentwood-based Goodrich Quality Theaters has 14 properties in Michigan, including Lowell, Grand Haven, Bay City, Kalamazoo, Jackson, Ann Arbor, Holland and Cadillac. It also has theaters in Illinois, Indiana, Florida and Missouri.
The company’s theaters will remain open during the bankruptcy, said Goodrich, whose father opened the company in 1930. He said his company is still bringing in money, just not enough to cover its obligations.
“I never anticipated this occurring, and yet it has, and I’m trying to wrestle with it,” he said.
Goodrich said his company landed in financial trouble for two reasons: He invested “a lot of money” on theater upgrades, after which sales fell about eight percent last year. He also pointed to the growth of streaming services, such as Netflix.
“I didn’t have a clear crystal ball,” said Goodrich, who ran unsuccessfully as a Democrat in 2014 against U.S. Rep. Justin Amash for Michigan’s 3rd Congressional District seat.
“I spent a lot of money putting recliners in some theaters and upgrading theaters, and then the industry turned negative.”
Goodrich’s company filed for bankruptcy in U.S. Bankruptcy Court in Grand Rapids on Tuesday, Feb. 25. In the filing, the company said it has $100 million or less in assets and $50 million or less in liabilities.
According to the bankruptcy filing, the company has fewer than 100 creditors. The largest unsecured creditor is Vistar Corporation of Belleville, Michigan. Goodrich owes Vistar $1 million, court records show.
Court records say Goodrich Quality Theaters owes $30 million to three banks: CIBC, Macatawa Bank and Independent Bank.
Most recently, the theater company received an emergency loan of $402,430 to ensure it could pay its employees and keep its doors open, according to court document filed Feb. 27.
In a motion filed Friday afternoon, attorneys representing the banks say Goodrich Quality Theaters defaulted on its obligations. They’re asking the bankruptcy court to appoint a trustee to oversee the company.
The banks say the trustee is needed because Goodrich Quality Theaters in not capable of operating independently during bankruptcy.
They allege that the theater company is not paying for critical services, such as its film vendors. Those vendors can shut off Goodrich’s movie projectors, immediately putting the company out of the business, the banks said in a court filing.
The banks also said the theater company fired a chief restructuring officer and investment banker it agreed to hire as part of a prior agreement with the banks.
A hearing on the banks’ request to appoint a trustee to oversee the theater company has been scheduled for Wednesday, March 4.
An attorney representing the banks could not be reached for comment.
Goodrich, in an interview with MLive, acknowledged the bankruptcy case is “contentious.” But he said he’s hopeful a resolution can be reached within three to four months, and that he’s confident he can find a buyer for any of his properties that are put on the market.
He said the plan is to sell off most, but not all, of his company’s properties. He said he wasn’t sure how many he would like to keep. Half of Goodrich’s theaters are owned by his company, while the other half are leased, he said.
“Those are questions I need some time to think through,” Goodrich said, referring to questions about how many theaters he would like to sell and for how much. “We’re working at the direction of the bankruptcy court. It has a lot to do with what the sale price is and what the ultimate obligations are to be paid.”
Here’s a full list of the company’s Michigan theaters:
- W. Columbia 7, in Battle Creek
- Three Rivers 6
- Quality 16, in Ann Arbor
- Quality 10 GDX, in Saginaw
- Oxford 7
- Krafft 8, in Port Huron
- Kalamazoo 10
- Jackson 10
- Holland 7
- Hastings 4
- Grand Haven 9
- Cadillac 4
- Bay City 10 GDX
- Ada-Lowell 5