Movie Gallery Inc. which filed for bankruptcy in February will receive about $74.2 million from liquidation sales, the highest bid at a bankruptcy auction for the video rental chain's inventory.
Great American WF LLC's bid was approved today by U.S. Bankruptcy Judge Douglas O. Tice Jr. in Richmond, Virginia. Tice granted Movie Gallery permission to hire the liquidator to conduct the closing sales at about 1,050 remaining locations... Gordon Brothers and Hilco, which are currently liquidating more than 1,300 Movie Gallery stores, filed an objection to the $1.75 million break-up fee sought by Great American. Their $63.3 million offer to act as agent for Movie Gallery in the liquidation of the remaining stores didn't include a break-up fee.
Bankruptcy Judge Tice denied the request for a breakup fee. There were other bidders involved with the bankruptcy auction; but many of them dropped out of the bidding after the bidding topped $64 million. The Movie Gallery bankruptcy liquidation is one of the biggest shakeups in the video rental industry's history. When Movie Gallery closes after its bankruptcy, it will leave only one major video rental company (Blockbuster) with brick and mortar locations. Many are already predicting that Blockbuster may follow Movie Gallery into bankruptcy; but most are not sure if it will liquidate or attempt to restructure its debts. For businesses who have a successful business models, Chapter 11 bankruptcy can offer an opportunity to restructure debts and competitively operate post-bankruptcy. But if a company is not viable, such as Movie Gallery, bankruptcy mostly offers the opportunity to liquidate the company, sale assets and repay its creditors.