Newberg Graphic Online

Hollywood Video will close its doors locally, elsewhere

Bankruptcy — Newberg store among 760 outlets that will close as parent company attempts to reorganize

• By: David Sale  
• Published: 2/9/2010 2:10:38 PM

   Newberg’s Hollywood Video rental store, located in Springbrook Plaza, is among 760 stores to close after parent company Movie Gallery Inc. filed for bankruptcy last week.
   The Wilsonville-based company filed for Chapter 11 bankruptcy in a Virginia court on Feb. 2, the second such filing for the troubled chain, which also owns Game Crazy video game rentals.
   Other closures nearby include Movie Gallery and Hollywood Video storefronts in Canby, Lake Oswego, Hillsboro and Portland. The Movie Gallery and Hollywood Video locations in Tualatin and Wilsonville will remain open, as will Game Crazy in Wilsonville and Sherwood — at least for the time being.
   “There will be further store closures, but we cannot speculate on the exact number,” the company announced in a press release, adding that 900 of its remaining stores have been identified as profitable, with the rest subject to review.
   “We intend to emerge from the reorganization process with a new and sustainable business model centered on a smaller base of profitable stores,” the release stated. Company representatives were not available for comment.
   In its bankruptcy petition, Movie Gallery estimated its assets a between $10 million and $50 million. Its debt is estimated to be between $500 million to $1 billion.
   Mounting financial losses — due to competition from video-by-mail services like Netflix, video rental kiosks and cable movies-on-demand — caused the company to fall behind on its loan payments.
   The bankruptcy petition comes less than two years after Movie Gallery completed a previous Chapter 11 filing that eliminated 1,700 stores. Movie Gallery, then based in Dothan, Ala., became the nation’s second-largest movie rental chain in 2005 when it acquired Oregon-based Hollywood Entertainment in a highly-leveraged deal.
   At its high point, Movie Gallery operated nearly 4,800 stores in the U.S., Canada and Mexico. It filed for bankruptcy in late 2007, but was still saddled with more than $750 million in debt.
In its current petition, Movie Gallery anticipates having no money to repay any of its unsecured creditors, including the movie distributors that stock its shelves. Many of the company’s more than 19,000 employees will also face layoffs.
   The Gordon Brothers Group, the same liquidator that oversaw the closure of Joe’s Outdoor Store, has reportedly been hired to oversee the store closures.

  (log in to rate)