Creditors Okay Gallery Reorganization Plan7 Apr, 2008 By: Erik Gruenwedel
Movie Gallery Inc. moved another step toward exiting bankruptcy protection when it said 90% of its creditors had approved its reorganization plan.
Dothan, Ala.-based Gallery said all 1,500 creditors voted on the plan the No. 2 video rental company structured last year with Sopris Capital Advisors LLC, including conversion of $325 million 11% senior notes and $72 million of Gallery's $175 million second lien (held by Sopris) into equity in the new company.
Joe Malugen, chairman, president and CEO Gallery, said he remained confident the reorganization plan met the requirements of the U.S. Bankruptcy Court in Richmond, Va.
“Through our ongoing restructuring we have positioned Gallery and Hollywood Video as stronger businesses, better equipped for long-term success,” Malugen said, in a statement. “We are confident that our plan represents a fair and equitable outcome for all of the creditors involved. We are pleased to have the strong support of our creditors and appreciate the continued loyalty of our customers, suppliers and employees.”
One notable dissent comes from the Internal Revenue Service, which last month filed an objection with the court seeking $7.5 million in tax related expenses.
The court is slated to rule on the plan April 9.