WILSONVILLE, Ore. (
, the movie-rental chain, is preparing to seek Chapter 11 protection from creditors as soon as next Tuesday, the
Wall Street Journal
As part of the bankruptcy restructuring, Movie Gallery could close roughly 1,800 stores or two-thirds of its outlets, leading to significant layoffs, sources told the
Movie Gallery is currently negotiating a "prearranged" bankruptcy with lenders who could approve a restructuring plan ahead of a bankruptcy filing, the
sources added. The talks reportedly are on Movie Gallery swapping a "significant" amount of debt for equity.
The company is also talking with liquidation firms to help close stores, these people said.
Movie Gallery didn't respond to the
requests for comment.
The company has been struggling to cope with changes in consumer preferences as consumers turn to alternatives such as Redbox, a unit of
, and devices such as