Movie Gallery liquidating inventory, assets at all 181 Canadian stores

By Jennifer Lanning Drey

Portland, Ore., June 16 - Movie Gallery Canada, Inc. has begun liquidating inventory and assets at all 181 of its Movie Gallery and VHQ stores in Canada, according to a company news release.

Movie Gallery Canada said due to growing challenges in its markets and other business concerns, it filed a notice of intention to make a proposal pursuant to the bankruptcy insolvency act on May 7.

A. Farber & Partners Inc. was appointed as trustee in the proposal and has been assisting the company in the process.

Movie Gallery noted in the release that it is not bankrupt and intends to file a proposal to its creditors in the near future.

The company's share of the net proceeds of the liquidation sale will be used to fund the proposal to its creditors.

In the meantime, the notice of intention and an order granted by the Ontario Superior Court of Justice on June 11 will provide an overriding stay of proceedings affecting all creditors until July 21 or later, if extended by the court.

All of the Canadian stores are scheduled to close on or before July 31.

Liquidation begins

Movie Gallery Canada has selected a joint venture group consisting of Schottenstein Bernstein Corp., Tiger Capital Group, and Hudson Capital Partners to conduct the liquidation sale.

The arrangement was also approved by the Ontario Superior Court of Justice on June 11.

The sale of 131 of the 181 store locations began on June 13, affecting inventory valued at about $33 million.

On June 11, Movie Gallery received offers from parties to acquire some of its remaining 50 stores.

However, the company said those offers have been declined, and Movie Gallery Canada has decided to liquidate all 181 of the Canadian stores through the agreement with the agent.

The remaining 50 stores will be added to the liquidation this week with an additional $15 million of inventory and other assets for sale.

Movie Gallery Canada's management will work with its advisers and Farber to maximize the outcome for the benefit of all of its stakeholders, the company said.

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

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