Richmond, Virginia. While the nation’s second largest video store chain had hoped to restructure in bankruptcy court and continue operating around a smaller set of viable stores, instead Movie Gallery will liquidate its operations under Chapter 11 of the Bankrutpcy Code. The company employed more than 19,000 people when it filed for bankruptcy.
Movie Gallery, the second-largest movie-rental chain by outlets behind Blockbuster Inc., failed to rebound after it emerged from bankruptcy in spring 2008 owned by private-investment firms Sopris Capital Advisors and Aspen Advisors.
Consumers are now viewing movies streamed online or through on-demand cable services. Netflix Inc. has cut into revenues of Movie Gallery and Blockbuster through its mail-order service and online offerings. In addition, movie-watchers have turned to alternatives such as Redbox, a unit of Coinstar Inc. that operates movie-vending machines in grocery stores, among other places.
Movie Gallery’s downward prospects were even commented on by Judge Douglas O. Tice, Jr. while presiding over the first day bankruptcy hearings during the retailer’s first bankrutpcy in 2008. In response to a statement by Movie Gallery’s counsel that the retailer had a plan to restructure and emerge from bankrutpcy competitive in the market, Judge Tice said, “Really?”
Movie Gallery’s financial woes trace back to debt it took on acquiring Hollywood Entertainment Corp. in 2005. It filed for bankruptcy in February under the weight of roughly $600 million in debt.
The law firm of Ronald Page, PLC has extensive experience representing creditors in retail bankrutpcies. Please contact our office to speak with Ronald Page, a Richmond, Virginia bankruptcy attorney.