The Movie Gallery, which purchased Hollywood Video in 2005, filed a Chapter 11 Bankruptcy petition in Richmond, Virginia. According to the company website, the company has only one location in the Atlanta area. The company has set up a Reorganization Page on its web site.
From Forbes ("Movie Gallery’s Closing Credits") –
Movie Gallery paid $1 billion to acquire Hollywood Entertainment, but has been struggling to repay that burden ever since. Movie Gallery’s stock plummeted 25%, or 7 cents, to close at an all-time low of 21 cents on Tuesday.
Last month Movie Gallery announced that it would close more than 500 stores in an effort to consolidate assets. The company has been under pressure to compete with online rental businesses such as Netflix and Blockbuster‘s Total Access program.
From the Hollywood Reporter, financing has already been secured –
Late on Monday, Movie Gallery also got interim bankruptcy court approval to access $140 million of $150 million in debtor-in-possession financing arranged by Goldman Sachs, which will help Movie Gallery to continue managing its business and pay its bills.
Movie Gallery operates 4,430 stores in U.S. and Canada under the names Movie Gallery, Hollywood Video and Game Crazy, though the Canadian operations are not included in the bankruptcy plan.
In announcing the plan, which had been expected for the past week, Movie Gallery said that "vendors should expect to be paid for postpetition purchases of goods and services in the ordinary course of business." The company also has asked for court permission "to continue to honor its current customer policies regarding merchandise returns and outstanding gift cards and customer loyalty programs."