Movie Gallery out of bankruptcy; plan of liquidation effective Nov. 18

By Caroline Salls

Pittsburgh, Nov. 19 - Movie Gallery, Inc.'s plan of liquidation took effect on Thursday, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The plan was confirmed on Oct. 29.

As previously reported, Movie Gallery has terminated its remaining business operations and liquidated or is in the process of liquidating its remaining assets.

The liquidation process will continue under the plan, and unsecured creditors will receive a distribution, even though the claims of many of the debtors' pre-bankruptcy secured creditors will not be paid in full.

Two liquidating trusts will be established under the plan, one for secured creditors and one for unsecured creditors.

The unsecured trust will be funded by $5 million in cash, and the secured trust will be funded by any remaining assets.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims, non-tax priority claims and revolver secured claims will be paid in full in cash;

• Holders of miscellaneous secured claims will be paid in full either in cash or through the return of the collateral securing the claim;

• Holders of first-lien term loan claims and general unsecured claims will receive a share of beneficial interests in a liquidating trust; and

• Holders of intercompany claims and interests will receive no distribution.

Movie Gallery, a Wilsonville, Ore.-based video and game rental company, filed for bankruptcy on Feb. 2, 2010. Its Chapter 11 case number is 10-30696.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.