CHATSWORTH, Calif. - Video rental chain Movie Gallery's previously announced plan to file for Chapter 11 bankruptcy protection has been executed, according to Reuters.
Giving notice of the move yesterday, the company — which operates 4,430 stores throughout the U.S. and Canada — entered the filing in Federal Bankruptcy Court in the Eastern District of Virginia.
Movie Gallery took this step because of its struggles to compete with rivals such as Netflix and Blockbuster, the only larger brick-and-mortar chain in the nation. The umbrella corporation overseeing Hollywood Video and Game Crazy, Movie Gallery saw its Nasdaq shares fall 25 percent, or 7 cents, to 21 cents. Its plan aims to convert roughly $400 million in debt to equity once it emerges from bankruptcy.