Report: Movie Gallery to file bankruptcy

Wilsonville, Ore. A late Wednesday report by Wall Street Journal said that Movie Gallery will file for Chapter 11 bankruptcy as early as next week.

The filing will mark the second time in two years the owner of Hollywood Video stores has sought protection from creditors.

Movie Gallery has not yet responded publicly, but WSJ cited people familiar with the matter as saying Movie Gallery could seek Chapter 11 protection from creditors as soon as Tuesday of next week, and that it could try to close about two-thirds of its outlets, or 1,800 stores. Those closures could lead to significant job losses at the company, which employs about 21,000 people.

Movie Gallery filed for bankruptcy in October 2007 and emerged from that in May 2008. Sopris Capital Advisors LLC acquired the company in 2008, when it last emerged from court protection.

Movie Gallery's negotiations center on a plan that would exchange debt for equity in a reorganized company, the Journal reported. The company's debt grew in 2005 when it bought Hollywood Entertainment Corp.