Movie Gallery Files Liquidation Plan16 Jul, 2010 By: Erik Gruenwedel
Defunct Movie Gallery, parent of Hollywood Video, has filed a liquidation plan with a bankruptcy court that lays the groundwork for payment to some creditors.
In a 79-page legalese July 13 filing with U.S. Bankruptcy Court in Richmond, Va., Gallery said the plan would provide “some” recovery for holders of unsecured claims despite the fact many of the rental chain’s secured creditors will not be paid.
Wilsonville, Ore.-based Gallery said it would allocate $5 million in cash to a liquidating trust for the benefit of its general unsecured creditors, with its remaining assets directed toward a second trust for the benefit of secured creditors.
The company said a disclosure statement outlining additional details of the plan required approval by the court.
Since filing for bankruptcy a second time Feb. 3, Gallery through June 4 reported a net loss of $170.7 million on revenue of nearly $344 million. A constant throughout the company’s last months was more than $985 million in liabilities and debt — the majority accrued when Gallery acquired Hollywood Video for $1.2 billion in 2005.