American Musical Theatre of San Jose said Monday that it has closed its operations and will file Chapter 7 bankruptcy this week. All of the employees were laid off the day before Thanksgiving. Michael French, a spokesman for AMT said the nonprofit suffered a $1.7 million dollar loss from a deal with Theater of the Stars in Atlanta that was doing a Tarzan musical based on the Disney production. The show was scheduled to come to San Jose in February. Michael Miller, AMT's CEO and executive producer, said in a press release that the Atlanta group used the funds "for other things." 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," Miller said. Legal action against the Theater of the Stars is likely, AMT officials said. "We are devastated for this community, our staff, and most of all for our loyal patrons," Miller said. "It is especially frustrating because of how hard we have worked, how sound our plan going forward has been, and because of the history and heritage of the American Musical Theatre of San Jose. This is a sad moment for all of us." Tickets for “Chicago” in January will still be honored and officials are working to negotiate a deal for “Avenue Q” scheduled to run in March. “Tarzan” and “42nd Street” have been canceled. Team San Jose Chairman and Convention & Visitors Bureau Chief Executive Officer Dan Fenton said his organization had already been in contact with a number of Broadway producers to book shows at the Center for Performing Arts where AMT performed. “This is not the end of Broadway in San Jose,” Fenton said. “We’re very confident that San Jose is a market where they want to be.” Fenton said he was optimistic that a full schedule could be announced for the following season.