Thursday, February 4, 2010, 7:54am CST
Movie Gallery files bankruptcy, closing 760 storesSt. Louis Business Journal
Movie Gallery Inc., which operates the Movie Gallery, Hollywood Video and Game Crazy stores, filed for Chapter 11 bankruptcy and plans to immediately close 760 of its nearly 2,700 stores.
According to the company’s Web site, none of its St. Louis-area stores are slated for immediate closure. The Wilsonville, Ore.-based movie and game rental chain said that it anticipates closing additional stores during reorganization. A liquidator, Gordon Bros. Group, is overseeing the store closures.
Movie Gallery Inc. operates stores in Pacific, Union, Sullivan and DeSoto under the Movie Gallery name. It operates stores in Illinois, although none in Metro East, under the names Movie Gallery and Hollywood Video.
Movie Gallery Inc. also operates Game Crazy locations in University City and Granite City.
The company said on its Web site that it will continue to operate through the reorganization process and that gift cards will be honored.
In its bankruptcy petition, filed late Tuesday in U.S. Bankruptcy Court for Eastern Virginia, Movie Gallery Inc. estimated its assets between $10 million and $50 million, compared to $500 million to $1 billion in debt.
“Movie Gallery’s goal is to emerge from the restructuring process with a new and sustainable business model centered on a smaller base of profitable stores,” the company said in a release Wednesday.
The company’s 2009 revenue fell to $1.4 billion from $2 billion in 2008, according to court documents. It posted a fourth-quarter operating loss of $129.3 million, compared to an $84.8 million operating loss in the same quarter of 2008.
In 2005, Movie Gallery bought rival movie rental firm Hollywood Entertainment in a highly-leveraged deal that included $862 million to purchase Hollywood’s outstanding stock and $380 million to refinance its debt.
Movie Gallery Inc. filed bankruptcy in 2007, reorganized through a round of mass store closings, and emerged in 2008 as a private company owned by creditors.
In its current petition, Movie Gallery anticipates having no money to repay any of its “well more than” 10,000 unsecured creditors.
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