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Movie Gallery Case Study
Well-Scripted Restructuring Leads to Retail Success
Background
Movie Gallery Inc. is a home video specialty retailer primarily focused on the rental and sale of DVD and VHS movies and video games. Headquartered in Dothan, Alabama, the company is the second largest North American home entertainment specialty retailer serving urban, suburban and rural markets. The company acquired Hollywood Entertainment Corporation in 2005 creating a combined organization of more then 4,500 stores in the United States and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy.
Looking to improve its balance sheet, release the company from its non-profitable lease agreements and binding operational contracts, Movie Gallery made the strategic decision to undergo formal restructuring. On October 16, 2007, Movie Gallery and five of its subsidiaries filed for Chapter 11 protection in the Eastern District of Virginia.
Results
Working closely with Movie Gallery’s team of professionals at Kirkland & Ellis LLP and Alvarez & Marsal, KCC managed a wide range of administrative-support functions throughout the duration of the case. KCC collaborated with Alvarez & Marsal to track schedules, prepare claims exhibits and maintain claims registers throughout the claims administration process.
Facilitating noticing to over 115,000 potential creditors, KCC managed both daily hard copy mailings and email alerts. Streamlining and coordinating the complex solicitation of nine different voting classes, KCC utilized KCC CaseView, the company’s proprietary technology platform, creating creditor-specific ballots, tabulating ballots and providing real-time reports. KCC’s high-volume production facilities played an integral role during solicitation, printing and distributing over 10,000 solicitation packets.
Movie Gallery emerged from Chapter 11 protection on May 20, 2008, securing an exit financing facility, providing the company with $100 million in operational funding. Movie Gallery successfully restructured its first lien indebtedness and converted $72 million of the company’s $175 million second lien indebtedness.
With a substantial commitment from Sopris Capital Advisors LLC, $50 million will be allocated to purchase new equity of reorganized Movie Gallery stock. Post-restructuring, Movie Gallery has a stronger balance sheet and greater access to capital. Today Movie Gallery continues to be a competitive player in the home entertainment specialty retailer arena.
To learn more about how KCC can help ensure your success, email or call us at 866.381.9100. |