Owner of the giant Hollywood Video movie rental chain, Movie Gallery Inc., has, as confirmed by official reports, filed for Chapter 11 bankruptcy protection. Also, the group is planning on shutting down about 805 stores which amount to nearly a third of its total outlets.

This is the second bankruptcy filing for Movie Gallery in a mere three years, and the reason seems to be the ever increasing competition the company is facing as more and more people opt to stream videos online from services like Netflix.

Initially, the company had landed in the bankruptcy court in October of 2007, as it was unable to deal with the debt it had picked on its $850-million acquisition of rival Hollywood Entertainment Corp. in 2005. As a part of the deal, Movie Gallery had agreed to assume nearly $350 Million of Hollywood Entertainment's own debt.

The filing has been done in the U. S. Bankruptcy Court for the Eastern District of Virginia in Richmond, and the company listed debts of between $500 Million to $1 Billion over assets of about $10 Million and $50 Million.