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Movie Gallery Files for Chapter 11… Again

With about half a billion dollars of debt, and 2009 revenue down 30%, No. 2 DVD rental chain also set to close 760 stores

The brick-and-mortar DVD rental business took on more water Wednesday, with Movie Gallery Inc., the No. 2 operator behind Blockbuster, filing for Chapter 11 bankruptcy protection for the second time since 2007.

In its filing, the privately owned Wilsonville, Ore-based chain reported that its revenue cratered in 2009 to $1.4 billion from $2 billion in 2008, and that its operating losses in the fourth quarter had swelled 52 percent to $129 million.

Movie Gallery owes more than $540 million to lenders and is behind or in default on loan payments.

As part of its restructuring, the chain said it would close 760 of its 2,400 locations.