The Dothan, Ala.- based parent company of Hollywood Video stores has filed for Chapter 11 bankruptcy. The event marks the second time Movie Gallery has filed for bankruptcy protection in three years.
Movie Gallery plans to shutter 760 of its 2,415 nationwide stores which include Hollywood Video, Movie Gallery and Game Crazy, but has not announced which stores are slated for the chopping block. The company operates two Hollywood Video stores in the Colorado Springs area and said in a statement on its Web site that closing underperforming stores will provide the company with funds for the future.
As a result of its 2005 buyout of Hollywood Entertainment Corp, Movie Gallery is saddled with roughly $600 million in debt. Over the past few years, the company has watched its business shrink as companies like Redbox and Netflix have entered the movie-rental industry. The company previously filed for Chapter 11 bankruptcy during 2007, and emerged during 2008 after an investment by private firms Sopris Capital Advisors LLC and Aspen Advisors LLC.