US Blasts Movie Gallery Ch. 11 Plan Over Tax Releases

Law360, New York (October 18, 2010, 1:51 PM EDT) -- Movie Gallery Inc.’s liquidation plan has encountered stiff resistance from the U.S. government over the treatment of the movie rental chain’s tax liabilities and the plan’s broad release provisions.

On Friday, the government urged Douglas O. Tice Jr. of the U.S. Bankruptcy Court for the Eastern District of Virginia to reject Movie Gallery’s Chapter 11 plan until the debtor rectifies the treatment of its post petition tax obligations and narrows “overly expansive” releases for its officers and directors.

The plan inappropriately treats post petition tax obligations...
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