Gallery Seeks Control of Store Leases28 Apr, 2008 By: Erik Gruenwedel
Bankrupt Movie Gallery Inc. April 28 filed a court motion with U.S. Bankruptcy Court in Richmond, Va. seeking authorization to assume control of all unexpired store leases by May 12.
The motion would suggest the Dothan, Ala.-based No. 2 DVD rental chain plans to exit bankruptcy protection possibly as early as that date. The court approved Gallery's fiscal reorganization plan earlier this month.
The company entered Chapter 11 protection last October listing debts in excess of $1.4 billion.
The reorganization plan, structured last year with Sopris Capital Advisors LLC, includes 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.
Gallery's first lien indebtedness remains in place on the restructured terms. Sopris will invest up to an additional $50 million to purchase new equity of the reorganized company. Existing shares of the Gallery's common stock will be canceled.
Gallery operates about 3,000 Gallery, Hollywood Video and Game Crazy locations in 50 states.