Rich Fiscus
13 Dec 2007 0:13
Mark Wattles, founder and former CEO of Hollywood Entertainment (parent company of Hollywood Video), is hoping to force Movie Gallery to at least give him a chance to buy his former company back. Movie Gallery, which is working on an reorganizing after filing for bankruptcy, purchased Hollywood Entertainment more than two years ago for more than $1 billion.
Despite selling the chain, Wattles retained 20 Hollywood Video locations, paying Movie Gallery $900,000 in royalties annually to keep using the name. Until recently Wattles was trying to force Movie Gallery to buy the stores from him as stipulated in the contract he signed with the company. While Wattles has completely dropped the issue of selling the stores, Movie Gallery is now trying to cut all ties to him without buying the stores.
Based on court papers filed December 11 Wattles, and a group of potential investors, has another idea. The papers indicate Wattles “is a potential investor in connection with a possible competing reorganization plan.” It's possible, if not likely, that such a plan would involve putting Wattles in the driver seat as CEO of the company. That might explain why Movie Gallery would want to get as far clear of him as possible.
The papers, which were an objection to a motion filed by Movie Gallery lawyers petitioning the court to allow them to simply disassociate themselves with Wattles current company Boards. The objection questions Movie Gallery's motivation, stating “It appears that the motive for the filing of the rejection motion may be to disincentivize competitive bidding or as retribution.”
Source: Video Business