Movie Gallery Files for Bankruptcy, Plans to Refinance Debt

BIRMINGHAM, Ala. (AP) - Video rental giant Movie Gallery Incorporated filed for bankruptcy Tuesday and indicated it could close additional stores to save money.

But the company says it has no plans to shake up management in the process.

Movie Gallery is the nation's Number 2 video rental chain and sought Chapter 11 banktuptcy protection after struggling with debt from its purchase of Hollywood Entertainment Corp.

It bought that rival for $1 billion in 2005.

The Dothan-based company also has tried to fight off online competition and announced plans to shutter about 520 unprofitable stores last month.

Movie Gallery said on its Web site that it would consider shutting down stores during the reorganization.

The company's stock was mostly unchanged, selling for 24 cents a share in Nasdaq trading. Shares sold for as much as $5.29 each in the last year.

Movie Gallery reported losing $14.9 million in thefirst quarter compared to a profit of $40.3 million during the same period last year.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

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