Court Approves $140M Gallery Loan17 Oct, 2007 By: Erik Gruenwedel
The day after it filed for Chapter 11 fiscal reorganization, Movie Gallery Inc. was granted the right to borrow up to $140 million by a U.S. Bankruptcy Court in Virginia.
The Dothan, Ala.-based No. 2 video rental company filed for bankruptcy protection in a pre-negotiated deal with many of if creditors. The company listed debts in excess of $1.4 billion and assets totaling more than $890 million.
The court allowed Gallery access to the funds from a $150 million debtor-in-possession (DIP) financing facility arranged with first lien debt holders and Goldman Sachs.
Gallery said it would use the funds combined with cash generated by daily operations to pay vendors, employees, health benefits and provide fiscal stability.
A final DIP hearing is slated for Nov. 6.
“We are pleased with the prompt action by the bankruptcy court in approving our first-day motions,” Gallery CEO Joe Malugen said in a statement. “This approval will allow our stores to continue to operate so that we can continue to serve our customers while implementing strategies to enhance our fiscal performance.”