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Wal-Mart, Safeway Join Halt to Gallery Closure Sales

30 Oct, 2007 By: Erik Gruenwedel

Wal-Mart Stores and Safeway Inc. have joined a growing list of landlords who are objecting to a bankruptcy court's decision allowing Movie Gallery to conduct store closure sales at more than 500 locations.

Dothan, Ala.-based Gallery, which operates 4,200 stores, Oct. 16, filed Chapter 11 bankruptcy citing debts of more than $1.4 billion and assets of $890 million.

The U.S. Bankruptcy Court in Virginia Oct. 17 granted a first-day motion allowing Gallery to conduct closure sales that circumvented mall guidelines and procedures regarding hours of operation, signage, banners, security and length of sale, among other issues.

Landlords were given 10 days to file motions in opposition.

Wal-Mart and Safeway are lessors to Gallery mall locations in seven states, including California, Florida, Kentucky, Maryland, Tennessee, Texas and West Virginia.

The plaintiffs argued they should be indemnified to the extent of any damages caused by Gallery and/or hired liquidators during the sales.

Last week a group of landlords representing 35 Gallery mall locations filed a motion in bankruptcy court seeking to halt the No. 2 video rental chain from liquidating select locations.

A hearing on the closures is set for Nov. 6.

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