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Another one bites the dust. Movie Gallery goes Chapter 11

submitted on February 3, 2010 by equipurple in "Sales / Promotions"
Movie Gallery files for Ch 11 bankruptcy

By Andrew Vanacore, AP Business Writer | February 3, 2010

NEW YORK --Movie Gallery Inc., owner of the Hollywood Video movie rental chain, has filed for Chapter 11 protection and plans to close 805 stores -- about a third of its total.

Its the second trip through bankruptcy court in just three years for Movie Gallery. The company is struggling with competition as more people choose to stream videos online from Netflix Inc. and other services or pick up $1-per-night rentals at Redbox kiosks.

The company, which is based in Wilsonville, Ore., first landed in bankruptcy court in October 2007, unable to sustain the debt it took on in its $850 million acquisition of rival Hollywood Entertainment Corp. in 2005. Movie Gallery agreed to assume about $350 million of Hollywood Entertainment's borrowings as a part of the deal.

The acquisition made Movie Gallery the No. 2 rental chain in the country behind Blockbuster Inc. but it has been forced to close more than 2,400 of its stores in the past three years, leaving about 2,600 still open, according to court filings made Tuesday.

Despite moving to shut down unprofitable locations, the company said it continued to see "significant" losses in 2009. Annual revenue fell $546.3 million, or 28 percent, to $1.4 billion.

In a court filing in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, Movie Gallery chief restructuring officer Steve Moore said the company was facing "looming defaults" on its loan agreements.

The company listed debts of between $500 million and $1 billion, compared with assets of between $10 million and $50 million.

Messages left with lawyers for Movie Gallery and Sopris Capital Advisors LLC, which became the company's majority owner under its previous reorganization in 2008, were not immediately returned.
     

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  Comments
  • 51642
    siggy38
    deity
    2 11 9
    12 9 2
    Posted by siggy38 on February 3, 2010
    [reply] 7 0
    That explains why the Movie Gallery by us closed up.
    Thanks. Sad
  • 51643
    orangearrows
    professor
    2 3
    7 1 1
    Posted by orangearrows on February 3, 2010
    [reply] 4 0
    Netflix is on the prowl
  • 51779
    reallyrob
    expert
    4 1 1
    Posted by reallyrob on February 5, 2010
    [reply] 10 0
    I love my NetFlix!!! Been with them since they started and haven't used any other rental places since! And I really loved when they came out with the Roku box...I love the streaming options!
  • 51807
    JackBauer
    admin
    Posted by JackBauer on February 5, 2010
    [reply] 7 0
    For me, Netflix on my Xbox is great. I love it. They have deals with current shows too, so on my Monday night I don't have to choose between 24, Raw, and Heroes. I can just Netflix the current episode.
  • 51853
    MrCheap
    professor
    2
    1 1 1
    Posted by MrCheap on February 5, 2010
    [reply] 4 0
    Martin + Osa's days could be numbered too

    http://www.post-gazette.com/pg.....927-28.stm
  • 51857
    deathbynosleep
    teacher
    7 1 1
    Posted by deathbynosleep on February 5, 2010
    [reply] 6 0
    List of closing stores. Just enter your zip code. Ones that are closing will say "closing store - savings storewide."

    http://moviegallery.com/storelocator.aspx
  • 51858
    deathbynosleep
    teacher
    7 1 1
    Posted by deathbynosleep on February 5, 2010
    [reply] 4 0
    I have one right down the street...might have to check it out. Anyone know if this includes any game crazy stores?
      51892
    • mooncow728
      professor
      1 1
      12 6 1
      Posted by mooncow728 on February 6, 2010
      [reply] 2 0
      Thank you for saying Game Crazy, that made me realize we might have these places in town. Didn't pay attention when I read the article I guess to the fact they are called Hollywood Video. My favorite one is closing. Sad
  • 51860
    jack69darin
    professor
    11 2 1
    Posted by jack69darin on February 5, 2010
    [reply] 1 0
    i think it is sad...Closing down American business for Netflik, that is owned by a foreign company, and people wonder Where are the jobs.
  • 51865
    reallyrob
    expert
    4 1 1
    Posted by reallyrob on February 5, 2010
    [reply] 4 0
    Isn't Netflix a US company? I'm pretty sure it is.
      51905
    • HouTex
      admin
      Posted by HouTex on February 6, 2010
      [reply] 4 0
      The Chairman, President, and CEO of Netflix is Reed Hastings, one of the original founders in 1997. The company headquarters is in California. The company delivered 1 billion DVDs in 10 years, and the second billion in only 2 more years after that. Netflix issued an IPO in 2002 and became a publicly-held company. You might be surprised to learn that in September 2008, about 88% of Netflix was owned by institutional investors. These included Goldman Sachs, TCS Capital Management, Aronson + Johnson + Ortiz, etc.

      (from http://www.hackingnetflix.com/.....owns.html) The percentages seem to be overlapping.
  • 51935
    equipurple
    professor
    2
    11 8 1
    Posted by equipurple on February 6, 2010
    [reply] 1 0
    And another (local chain)
    Ski Market, the bankrupt seller of outdoor products and winter sports gear, is launching a liquidation sale today at the Wellesley chain’s seven remaining shops. The longtime business is expected to shutter in the coming weeks after the inventory, including rental gear, is sold off by Boston liquidator Gordon Brothers Group.

    Today’s sale will offer discounts starting at 20 percent off goods at [Massachusetts] Ski Market stores in Boston, Framingham, Pembroke, Woburn, Wellesley, along with those in Avon, Conn., and Warwick, R.I. A Bankruptcy Court judge yesterday gave approval to Gordon Brothers’ roughly $1.2 million purchase of the inventory.

    The liquidation sale comes more than a month after Ski Market first filed for bankruptcy protection in December. In court documents, chief executive Andrew Ferguson said the business had been operating at a loss for several years and the recession made its problems more acute.

    “It’s sad to see another iconic New England brand be a victim of the recession,’’ said Tim Shilling, director of Gordon Brothers.

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