Movie Gallery (MOVI) Goes Chapter 11

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According to The Wall Street Journal, Movie Gallery (MOVI), the video rental chain, will go Chapter 11.

The company’s shares fell as low as $.20 after hours. They had closed at $.45, down from a 52-week high of $5.29.

The newspaper writes "Under the pre-negotiated plan, Movie Gallery would convert its bonds to stock, and a portion of its second-lien debt also will be converted to stock. The company had $1.2 billion in debt as of July, including $322 million in bonds, $175 million in second-lien debt, and $600 million in first-lien debt."