American Musical Theatre of San Jose will be closing its doors after filing for
Chapter 7 bankruptcy. The theatre was well-known and popular for bringing the touring productions of Broadway musicals to the Bay Area.
The bankruptcy filing comes after the nonprofit theatre company lost $1.7 million in a deal that collapsed with Theater of the Stars in Atlanta. American Musical Theatre of San Jose (AMT) paid Theatre of the Stars $1.7 million to fund a musical production of Disney's Tarzan that was scheduled to come to AMT in February 2009.
Michael Miller, AMT's CEO and executive producer, said in a press release that the Atlanta theatre company had used the funds slated for Tarzan for other projects without AMT's knowledge.
"In essence, they canceled the show without giving us any warning, and we discovered that the funds we had paid for 'Tarzan' were spent on another production of theirs, which lost a significant amount of money," said Miller.
But the theatre had been facing financial troubles before the deal with Theatre of the Stars fell through. According to an article on the MercuryNews.com, the company was running a deficit of more than $2 million, according to its latest tax statement, and had received bailout from the city of San Jose in 2006.
But despite the huge deficit, AMT officials were still hopeful they could keep the theatre alive.
"We had a model in place that was going to work, and it just got snatched away from us, and it's very disheartening and frustrating," said Robert Nazarenus, AMT's chief financial officer. "We worked very hard to get here, and to have somebody take that away is unconscionable."
AMT considered all possible options to keep the theatre alive, but ultimately decided it would be very difficult to get subscribers to renew for next season amid such uncertainty.
AMT is now strongly considering taking legal action against Theatre of the Stars.
"We are now in pretty aggressive conversations about a lawsuit so that we can recoup the funds we owe out to our community," said Miller. AMT currently owes the city of San Jose $1 million for an outstanding loan, as well as reimbursements to season ticket holders.
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