Movie Gallery Inc.'s Store Closings
Spur Worry Among Landlords

Landlords of some of the 520 stores that Movie Gallery Inc. aims to close are worried that the company could depress business at 35 shopping centers around the country by posting going-out-of-business signs.

In papers filed Friday with the U.S. Bankruptcy Court in Richmond, Va., the landlords asked a judge to restrict the manner in which the company closes its stores. Movie Gallery, they said, shouldn't be allowed to post "Going Out of Business At This Location" signs.

Nor should it be allowed to post signs containing the word "Bankruptcy," they said. Flashing lights or signs with "neon or day-glow colors" also should be forbidden, they said.

Movie Gallery, based in Dothan, Ala., has about $1.4 billion in liabilities and $892 million in assets, according to its bankruptcy petition. To cut costs, the company plans to shut down 520 stores, saying it expects to save about $70 million in rent.

U.S. Bankruptcy Judge Douglas Tice last week gave the company permission to begin closing stores and to sell leases at an auction set for Nov. 15. The landlords said they were "surprised" by Judge Tice's decision to approve the auction of leases and asked him to rescind it.

The landlords include the owners of shopping centers in more than a dozen states. Their agent, an affiliate of the Inland Real Estate Group of Cos., said in court papers Friday that Movie Gallery's need to quickly close its stores should be balanced with the landlords' need to protect "the integrity and appearance of their property and shopping centers."

Among other things, the store-closing guidelines allowed the company to post as many going-out-of business signs as it wanted. It also allowed the company to "choose whatever [working] hours" it deemed appropriate for the stores. The agent called those guidelines "broad, unilateral and egregious."

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