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Court Approves Gallery 'Disclosure'

5 Feb, 2008 By: Erik Gruenwedel



Bankrupt Movie Gallery Inc. Feb. 5 said the U.S. Bankruptcy Court of Richmond, Va. has approved a disclosure form regarding the No. 2 video rental company's fiscal reorganization plan.

Dothan, Ala.-based Gallery must now obtain official votes in favor of the plan from its key lenders, which is considered a formality since they last month agreed to support the fiscal restructuring.

As previously stated, the new financial plan includes conversion of $325 million 11% senior notes and other general unsecured claims into equity of the new company.

Gallery's first and second liens would remain in place with the exception that Sopris Capital Advisors would provide 11% senior note holders an additional $50 million in equity.

Existing shares of common stock will be nullified.

“With the court's authorization, we can now begin the solicitation of stakeholder votes on our plan, which is another important step forward in our restructuring process,” said Joe Malugen, chairman, president and CEO of Gallery. “We are very proud of what we have accomplished thus far as we work to emerge as a competitive and financially stable company.”

If approved, Gallery expects to exit bankruptcy protection some time in the second quarter.

The court will formally consider approval of the plan at a confirmation hearing April 9.

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