Gallery Clears Store Closure Sale Hurdle6 Nov, 2007 By: Erik Gruenwedel
Bankrupt Movie Gallery Inc. will be allowed to proceed with store closure sales in more than 500 locations after agreeing to terms spelled out by landlords.
The resolution — ironed out with landlords prior to a Nov. 6 court hearing — mandates Gallery hold its sales in accordance with lease guidelines, including a 60-day limit on the sales.
Late last month, many of the landlords, including Wal-Mart and Safeway, filed motions with the U.S. Bankruptcy Court in Virginia complaining that an Oct. 17 court ruling would have allowed Gallery to circumvent lease rules — including hours of operation, signage and other concerns — during the sales.
The landlords had also sought payment of limited liquidation and closure performance bonuses and severance payments.
The No. 2 movie rental chain had earmarked many of the mall-based store locations for closure prior to the bankruptcy filing.
Separately, Gallery was allowed to continue business operations with Hollywood studios as it maintains business operations.
Dothan, Ala.-based Gallery, which operates 4,200 stores, last month filed Chapter 11 bankruptcy citing debts of more than $1.4 billion and assets of $890 million.