Movie Gallery and Wattles’ Boards resolve dispute

Boards stores will lose license for Hollywood name

By Cindy Spielvogel -- Video Business, 3/27/2008

MARCH 27 | Movie Gallery has resolved its dispute with Boards, the company owned by Hollywood Entertainment founder and former CEO Mark Wattles, according to a March 26 filing in U.S. Bankruptcy Court in Richmond.

The stipulation and order signed by U.S. bankruptcy judge Douglas Tice indicates that the 20 stores retained by Wattles will no longer be able to use the Hollywood name.

As of Aug. 31, or earlier if both sides agree, the Boards stores will no longer use the Hollywood name or related materials and will no longer receive product or support through Hollywood, according to the terms of the agreement.

Movie Gallery had filed a motion to end Hollywood’s agreement to license the Hollywood name and other materials and provide product and support to the 20 stores that Wattles’ Boards had retained after Hollywood was sold to Movie Gallery in 2005.

The 20 stores had been the subject of a dispute over whether they would be sold to Movie Gallery and at what price.

In objecting to Movie Gallery’s motion to end the licensing agreement, Boards had indicated Wattles could be involved in a competing reorganization plan for Movie Gallery.

According to the new filing under the Movie Gallery bankruptcy case, Boards “will not object to or otherwise commence any proceeding opposing the provisions of the plan or confirmation of the plan.”

Also according to the filing, Hollywood will not be obligated to supply Boards with product after releases with a July 2 street date and will not be obligated to supply special orders after April 2.

Boards will stay on Hollywood’s POS system until May 2 or 10 business days after Boards provides written notice that it has stopped using the system, as long as that date is before the termination date of the entire licensing and product agreements.

Boards will purchase revenue-sharing product still in-term at its stores that were supplied through its agreement with Hollywood, with pricing to remain confidential.

Any further dispute over the agreement will be resolved by the bankruptcy court, according to the filing.

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