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IRS Withdraws Gallery Objection

8 Apr, 2008 By: Erik Gruenwedel

The last significant hurdle preventing Movie Gallery Inc. from exiting bankruptcy has been resolved, allowing for likely confirmation of the No. 2 DVD rental company's reorganization plan April 9 by U.S. Bankruptcy Court in Richmond, Va.

The Internal Revenue Service formally withdrew its objection based on $7.5 million it claimed Gallery owed in tax-related expenses, according to a court filing.

Dothan, Ala.-based Gallery, which entered bankruptcy protection last October, April 4 said all 1,500 creditors voted on the plan it 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.

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