• November 14, 2019

Frank Theatres files bankruptcy reorganization - Ocean City Sentinel: News

Frank Theatres files bankruptcy reorganization

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Posted: Wednesday, October 3, 2018 2:40 pm

Frank Theatres, owner of the former Beach Theatre complex in Cape May, the Rio Mall, the former Kmart shopping center in Rio Grande and the Rio Stadium 12 Theatre at that location, filed for Chapter 11 bankruptcy.

The Frank organization filed for Chapter 11 bankruptcy protection under four entities: Frank Entertainment Cos., Frank Theatres Management, Frank Investments and the Rio Mall LLC in Rio Grande. The filings were made in U.S. Bankruptcy Court in West Palm Beach, Fla.

Owner Bruce Frank told the Sentinel the bankruptcy was an “overall corporate strategy.” He said the Chapter 11 filing is a reorganization of its companies and it planned to work with a group to redevelopment the Beach Theatre site in Cape May. He acknowledged the city granted approval to construct condominiums on the site several years ago.

“Overall it will be good for the city and great for the property,” Frank said.

He said it was not in their plans to work with the developers of the Harbor Square Theater, a venue that combines movies, food, wine and live entertainment in Stone Harbor, to return the building to use as a theater.

“We do have a plan, that’s why they call it a plan of reorganization,” Frank said.

The closing of Kmart in Rio Grande in 2017 contributed to the bankruptcy filing of Rio Mall LLC, since Kmart was a tenant of the Frank organization, he said.

“Is there probably 200 or 300 Kmart centers in reorganization around the country?” he asked. “When Kmart represents two-thirds of the income to a property and they leave and don’t pay the rent or the CAM (common area maintenance), the property gets hammered.” 

He said he has a plan for the Rio Grande complex that was submitted to a lender and should be completed in the next 45 days. Frank said he expects to have the theaters upgraded by spring with new seating, sound systems, carpeting and expanded concessions to include some hot food such as pizza and chicken tenders. 

The Frank Theatres Rio Stadium 12 will be completely redone with four additional screens, he said. 

The company owns two Cine Bowl and Grille locations in other states combing movies, bowling and a restaurant, but that is not planned for the Rio Stadium 12.

“Rio’s tough spot is it doesn’t have a liquor license, there’s not one available,” he said. “If it were available, it would be very expensive.” 

Plans are in place to convert the Towne Stadium Theatre in Egg Harbor Township into a Cine Bowl and Grille because it has a liquor license.

“That’s part of the Cape May program because all those properties are tied together,” Frank said.

He acknowledged ticket sales in the motion picture industry are down on a national level but up on a worldwide level. He said the change in the industry is toward boutique theaters. 

“You won’t see 24 plexes built ever again,” he said. “The theaters will be nicer, smaller, more intimate but be able to serve food and beverage.”

Frank said the movie business has always been dependent on concessions, which provide the largest profit margin. He said the average American goes to the movies only five and half times per year.

“On a national level, ticket sales are down but food and beverage sales are up,” Frank said.

According to court papers, the Frank organization failed to pay its monthly rent for the Tilton 9 Theater beginning in June 2018 and as result, on Aug. 10 the landlord, Tilton Properties, filed a verified complaint for possession against the debtor in the Superior Court of New Jersey, Law Division-Atlantic County.

As a result, on Sept. 10, the court entered a judgment for possession and a warrant of removal.

On Sept. 20, the Frank organization filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Florida.

According to court documents, Frank Theatres LLC borrowed $750,000 for improvements to the building from Tilton Properties and later an additional $200,000 due to unanticipated costs of renovations. Payments were missed in 2016, according to court records. 

According to intergameonline.com, at one time, Frank Theatres owned and operated 25 theaters across seven states and claimed to be in the process of building 25 other Frank Theatres Cinebowl and Grille entertainment complexes along the East Coast.

According to the Kingsport Times-News, quoting court records, the reason for the bankruptcy filing was Frank Theatres was unable to absorb the expenses associated with the closing of its unprofitable theaters. The closings created significant liabilities with the theaters’ former landlords, the court filings state.

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