LOS ANGELES Movie Gallery Inc said on Tuesday it had concluded its Chapter 11 restructuring and had successfully emerged from bankruptcy protection.
Movie Gallery, the second-largest North American video rental company with about 3,300 stores, also said it closed a $100 million exit financing facility and named a new seven-member board of directors.
Neil Subin, managing director of Trendex Capital Management, which focuses primarily on distressed and troubled companies, was named chairman of the board.
Under the reorganization plan, Movie Gallery is issuing new common stock and warrants, which will be distributed to certain classes of unsecured creditors. Current shareholders are not eligible to get distributions of new common stock or any other distributions.
Effective on Tuesday, Movie Gallery's existing shares of common stock, its 11 percent senior notes and 9.625 percent senior subordinated notes have been cancelled.
Earlier this month, Movie Gallery reached an agreement to sell its VOD service, Moviebeam, to Dar Capital Limited for $2.25 million.
Movie Gallery turned off the on-demand movie service in December, which had about 1,800 subscribers, as part of its restructuring under Chapter 11 protection.
The service, which used a network of PBS television stations to distribute signals, required customers to purchase a television set-top box that allowed them to order films.
Movie Gallery first entered bankruptcy in October 2007 and has closed about 950 stores since September as it struggled to compete in a maturing marketplace further challenged by evolving new video distribution models used by companies such as Netflix Inc and Apple Inc.
The video rental market's leader, Blockbuster Inc, in seeking to redefine itself in various ways, including through a bid to buy consumer electronics retailer Circuit City Stores Inc for $1.3 billion.
(Reporting by Sue Zeidler; Editing by Braden Reddall)