Hollywood Video Bankruptcy Story
If you are a film buff, theres a good chance you are a member of either Blockbuster Video or Movie Rental, the two largest movie rental companies in the US as of 2009. You may have shifted your loyalties to online-based services like Netflix recently, but for a whole generation of Americans, renting a movie for a leisurely Saturday at home invariably meant visiting the local Blockbuster or Movie Rental or Hollywood Video (also a part of the Movie Rental) family. Not any longer.
On 3 February 2010, Movie Time filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. On 30 April 2010, a company-wide conference call announced that all US Hollywood Video, Movie Gallery, and Game Crazy (game rental) stores would begin the liquidation technique in May 2010, with the chains Canadian stores following suit one month later.
This was Movie Gallerys second trip down the bankruptcy lane in three years and marks an unblessed end to one of the continuing cornerstones of American living . Formed in 1985 by Joe Malugen and Harrison Parrish in Dothan, Alabama, Movie Gallery revolutionized the movie rental profession . With VCRs enhancing increasingly affordable, most American households looked in the direction of movie rental stores for their everyday enjoyment , and Movie Gallery grew speedily . By June 1987 the companionship owned five stores and had 45 franchisees. In 1988, the company started consolidating the franchisees into company owned stores. By 1992, The company had a complete of 37 stores and annual revenues of $6 million.
Blockbuster Video also started around the same time as Movie Gallery and fast captured the No.1 spot. Although Movie Gallery was a close contestant , subsequent position was taken by Hollywood Video, an Oregon-based video rental chain started in 1988 by Mark Wattles and his wife. Blockbuster attempted a opposed takeover of Hollywood Video in end-2004, which drove it into the arms of Movie Gallery. Movie Gallery completed its acquisition of Hollywood Video on 27 April 2005 for $850 million, including assuming $350 million of due .
The due proved to be a millstone around the companys neck, forcing it to close 520 stores (of a aggregate of 4,500) in September 2007 and file for bankruptcy one month later. thus , the stock plummeted under $1 a share, forcing NASDAQ to de-list Movie Gallery. As fragment of bankruptcy reorganization guided by its creditors, the company closed more than 1,000 stores nationwide, leaving it with a portfolio of 3,300 stores when it emerged from bankruptcy in May 2008. though , this was not the end of its troubles.
Cheaper DVDs and struggle from online providers like Netflix continued to drive down sales. Despite efforts to shut down unfruitful locations, the company said it continued to perceive "notable " losses in 2009. Annual revenue fell $546.3 million, or 28 percent, to $1.4 billion. Over a little duration from October to December 2009, Movie Gallerys stock fell from $1.25 to $.05 a share, and a few properties fell behind on lease . The company hired restructuring firm Moelis & Co. to scout for buyers but couldnt find any. Law firm Sonnenschein, Nath & Rosenthal were hired to practise a bankruptcy filing, and the axe fell on 3 February 2010 at the US Bankruptcy Court for the Eastern District of Virginia in Richmond. The bargain filed with the court said the progress to close all the left over stores is in the "superior interests" of the company and its creditors.
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