Dothan, Ala. — The No. 2-ranked video rental chain Movie Gallery filed for chapter 11 bankrupcty protection Tuesday.
Video Business, a TWICE sister publication, reported that the bankruptcy had been expected by many in the industry, although the chain had taken recent steps to avert the action, including closing 520 stores.
In the reorganization, the video rental chain said it will restructure its more than $1 billion debt load, which was the main source of its difficulties.
Movie Gallery will continue operating during the bankruptcy, and its Canadian subsidiary will not be part of the filing.
The announcement said vendors will be paid for purchases made after the date of the filing.
Many of the recently closed stores were recently acquired Hollywood Video locations, which have suffered since competitor Blockbuster introduced its Total Access online/in-store rental program last November, Video Business reported.