Movie Gallery's employee incentive plan approved
Court extends reorganization period
By Cindy Spielvogel -- Video Business, 1/30/2008
JAN. 30 | The U.S. Bankruptcy Court in Richmond, N.C., granted Movie Gallery’s motion to offer incentive pay to employees in hundreds of additional stores it plans to close.
The potential store closings are the latest phase of Movie Gallery’s plans to emerge from bankruptcy as a smaller but financially stable company.
The Court also extended the period under which Movie Gallery may work to reorganize without facing competing proposals. Movie Gallery’s exclusive right to restructure under its chapter 11 plan was set to expire Feb. 13, but the court extended the deadline to June 13.
If the court didn’t grant the extension, Movie Gallery could have faced “unwarranted interference from a dissident party attempting to derail the consensual restructuring process that has taken place,” according to court papers filed on behalf of the company.
The court also extended the deadline for Movie Gallery to obtain support from creditors for the plan from April 13 to Aug. 13. Major creditors including Sopris Capital Advisors already have agreed to the plan.
The court is scheduled to consider Movie Gallery’s disclosure statement outlining the plan at a Feb. 5 hearing. If the court approves the plan, it will be sent to creditors for an official vote.
The plan, formally unveiled Dec. 22, involves converting debt into equity and the cancellation of existing shares of the company’s common stock.