Los Angeles Movie Gallery’s Canadian subsidiary has begun liquidating all 181 of its video rental stores, including 50 stores that were potentially up for sale but no longer are.
Net proceeds from the sale of inventory worth an estimated 48 million Canadian dollars ($47 million) will be used to fund a proposal by the company to pay its Canadian creditors, including landlords and employees, Movie Gallery said.
The Canadian unit, Movie Gallery Canada, is not in bankruptcy proceedings.
Wilsonville, Ore.-based parent Movie Gallery filed for Chapter 11 bankruptcy in February.
Last month, a U.S. bankruptcy judge approved the American company's plan to close 1,050 stores and liquidate its assets, in a move expected to generate $62 million (see related story). The company operates U.S. stores under the names Hollywood Video, Movie Gallery and Game Crazy.
In Canada, the stores operated under the Movie Gallery and VHQ banners. The unit had delayed liquidation as it sought a strategic buyer, but it recently declined all offers and decided to liquidate the stores.
The Canadian stores, which operate in every province but Quebec, are expected to close by July 31.