The Wall Street Journal has reported that home video retailer/rental company Movie Gallery is headed for a Chapter 11 bankruptcy filing in a pre-packaged deal with its creditors.  As part of the deal, its bonds and some of its other debt will be converted to stock.  It will file later this month, and hopes to emerge early next year, according to the report. 

The company has been unable to make its debt payments (see 'Movie Gallery Teeters on the Brink'), and recently announced that it will close over 500 stores (see 'Movie Gallery Shutters 520 Stores').