"The filing of our plan is a significant step towards emergingfromChapter 11 as a stronger, more competitive company," says JoeMalugen, chairman, president and CEO, in a statement announcing thefiling. "We have made substantial progress in addressing ouroperational and financial challenges and we are confident that thecompany will be well-positioned to operate profitably and createvalue for all of its stakeholders upon emergence."

When the chain filed for a prenegotiated Chapter 11 bankruptcyprotection on October 16, 2007, it operated 4,430 stores. Facedwith continuing competition from on-demand video services fromcable companies, Internet-based rental companies such as Netflix,and direct downloads, the chain now operates approximately 3,650stores in the US and Canada. It remains the second-largest videorental chain after Blockbuster Video, using the names MovieGallery, Hollywood Video and Game Crazy.