Movie Gallery Bankruptcy- Round Two

Richmond, Virginia.  Movie Gallery Inc., operator of the Hollywood Video rental chain, filed for bankruptcy for the second time in three years after sales fell and losses mounted, and said it would close 805 U.S. stores.  Ronald Page has extensive experience representing landlords, vendors, lenders, and other creditors in retail bankruptcy cases. 

The closings affect one-third of the company’s 2,415 U.S. stores, court filings show. Several thousand of its roughly 19,100 employees will probably lose their jobs.

Movie Gallery and four affiliates filed for protection on Tuesday, February 2, 2010 with the U.S. bankruptcy court in the Eastern District of Virginia, Richmond Division.

In its initial bankruptcy filings, Movie Gallery rejected the leases for hundreds of stores with plans to close even more.  The order granting the initial rejection was granted as part of its first day hearings.  Landlords have 10 days from the date of the service of the motion seeking the rejection of the leases in order to file their objection.

Landlords whose leases were rejected may have issues related to opposing the rejection, calculating their damages, filing proofs of claim with Movie Gallery’s claims agent, and defending preference actions.

Meanwhile, landlords whose leases were not rejected are not yet out of the woods.  There leases may still be rejected, and in the interim, they may have a number of issues in Movie Gallery’s bankruptcy.  These issues may include but are not limited to calculating their damages, renegotiating their leases with Movie Gallery, negotiating adequate protection payments, filing proofs of claim with Movie Gallery’s claims agent, and defending preference actions.

Movie Gallery owes more than $540 million in principal to its first- and second-lien lenders. By October 2009, it was delinquent on many obligations and faced possible looming defaults under loan covenants.

Founded in Dothan, Alabama in 1985, Movie Gallery once operated nearly 4,800 stores, following its 2005 purchase of Hollywood Entertainment Corp.

By order of the bankruptcy court entered on February 3, 2010, Movie Gallery and its four affiliates were consolidated under one case as In re Movie Gallery Inc, No. 10-30696, in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. 

As mentioned above, Ronald Page has extensive experience representing landlords and other creditors in retail bankruptcy cases.  Please contact me directly if you need representation in the Movie Gallery case.