Dothan, Ala. - Movie Gallery, the nation's second-largest movie rental chain behind Blockbuster, announced on Tuesday that it has filed for Chapter 11 bankruptcy, and will close some of its stores as part of a reorganization plan.

The Dothan, Ala.-based company has been saddled with debt since its $1 billion acquisition of Hollywood Entertainment Corp. -- owner of the Hollywood Video rental store chain -- in 2005.

The company partnered with Sopris Capital Advisors to finance a reorganization of its debt, and is seeking $150 million from Goldman Sachs to fund operations during its Ch. 11 proceedings.

Movie Gallery said last month it would shutter over 500 of its over 4,400 stores, and may begin that process during the planned reorganization.

The company reported $14.9 million in losses for the first quarter of 2007, compared to a profit of $40.3 million in the same period a year ago.

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http://tinyurl.com/2tfh7b (Reuters)

http://www.moviegallery.com