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Movie Gallery: bankruptcy court confirms company's plan of liquidation
By Lisa Kerner
Charlotte, N.C., Oct. 29 - Movie Gallery, Inc.'s plan of liquidation was confirmed according to a Friday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.
The company filed its plan in July and the disclosure statement was approved in September.
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.
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