Movie Gallery is struggling and it may have to close two-thirds of its 3,000 stores. It seems like every day another well known company is considering bankruptcy, and this time the company is Movie Gallery. No stranger to bankruptcy, Movie Gallery has filed for bankruptcy protection before. Now, the company is struggling to stay afloat, because more and more customers are choosing movie watching options that do not include going to a store.
Many customers are streaming movies online, downloading movies, or paying to watch them through their satellite service. Falling revenue has been bad news for Movie Gallery, because the company took on a substantial amount of debt in 2005 when the company purchased Hollywood Entertainment Corp. Hollywood Entertainment Corp. ran the popular Hollywood Video chain.
The bankruptcy is still up in the air, because Movie Gallery is looking to file a prearranged bankruptcy. That means lenders will have to make an initial agreement on the terms of the bankruptcy before the company is allowed to file. Prearranged bankruptcies are popular with corporations because they save time and money.
When it is all said and done Movie Gallery might be a completely different looking company. The company currently has over 3,000 stores, and it might have to close two-thirds of those. The closings would mean bad news to a large portion of the 21,000 people that are currently employed by the company. That number is likely to drop significantly.
It is definitely great news for Movie Gallery that bankruptcy is an option for the company. Without bankruptcy, the company would not be able to continue operating. Too much debt and too little revenue forced the company into a position of not being able to survive.
Conversely, the bankruptcy could mean many more people unemployed. Job losses can be tough on personal financial situations, but being unemployed doesn't mean you have to lose everything. If you or anyone you know is struggling financially because of a job loss, don't hesitate to contact a bankruptcy attorney. A good Dallas bankruptcy attorney will evaluate your financial situation, and they will tell you if bankruptcy could help you.