Movie Gallery to shutter 760 stores
Thousands of jobs ending during second bankruptcy filingMovie Gallery is filing for bankruptcy again, a move that will close hundreds of stores, end thousands of jobs and cause some angst at the studios that are owed money.
The bankruptcy reorganization -- its second in three years -- does not include its operations in Canada, where it runs 184 stores, though at least 760 stores in the U.S. branded Movie Gallery, Hollywood Video and Game Crazy will shut down.
The closures will leave the company with 1,906 stores in the U.S., though Movie Gallery said it "anticipates closing additional stores during the Chapter 11 process."
Movie Gallery's bankruptcy stems from its $600 million debt, thanks in large part to "winning" a bidding war against Blockbuster for the privilege of acquiring Hollywood Entertainment in 2005.
The company made it clear it is not going out of business and that it intends on working with studios to ensure access to their movies, which they'll pay for after their bankruptcy filing. But "federal law prohibits us from paying for goods and services purchased or received" prior to Feb. 2, according to a statement from the company.
At its Web site, Movie Gallery asks consumers with rented movies in their possession from stores that have closed to return them "in a reasonable time frame" to a store that remains open.
After the company's bankruptcy in October 2007, venture firms Sopris Capital Advisors and Aspen Advisors emerged as its primary owners, and Movie Gallery shrunk to about 3,000 stores from its peak of about 4,800.
As of Wednesday, the company employed 21,000 people. It did not say how many were facing layoffs, and executives were not answering e-mails or phone calls Wednesday.