For the second time since 2007 the beleaguered DVD rental chain Movie Gallery has filed for Chapter 11 bankruptcy.  The Wilsonville, Oregon-based chain also announced its intention to close some 760 underperforming locations, which represent nearly 30% of the chain’s 2,400 stores, immediately.  The fate of a number of the remaining Movie Gallery (and Hollywood Video) stores remains uncertain, though some additional outlets will undoubtedly be shed during the restructuring process.  A restructuring notice on the Movie Gallery Website indicates that the company hopes to emerge from bankruptcy with a leaner chain of about 900 stores that generate profits.

Movie Gallery first filed for bankruptcy in October of 2007 only to emerge in May of 2008 with the private equity firm Sopris Capital as its majority stockholder.  Faced by brutal competition from Netflix, rental kiosks, and video-on-demand, Movie Gallery’s revenue fell from $2 billion in 2008 to $1.4 billion in 2009.  The chain, which once encompassed more than 4,800 stores, owes more than $540 million to first-and-second lien lenders.

It’s not as if the closings announced today were unexpected.  Last November Movie Gallery announced the closing of 400 outlets (see “Movie Gallery Closing 400+ Stores”), and there were numerous reports in mid-January that the chain would be shedding a huge number of storefronts (see “Movie Gallery to Close Another 1,000 Stores?”).