Blockbuster has filed for Chapter 11 bankruptcy, listing assets of $1.02 billion against debt of $1.46 billion. The video rental says its U.S. operations will continue normal business while in bankruptcy.
September 23, 2010 by Steve Crowe
Blockbuster has filed for Chapter 11 bankruptcy, listing assets of $1.02 billion against debt of $1.46 billion.
Blockbuster says it has reached a deal with a group of bondholders on a reorganization plan and secured $125 million loan to finance operations.
Blockbuster says its U.S. operations will continue normal business while in bankruptcy. Blockbuster will no longer provide funding to support its operations in Argentina.
“To preserve its three-decade long developed brand value, Blockbuster seeks a restructuring that permits a significant deleveraging of its business so that it can move forward at the digital clip at which its industry and competitors are currently running,” Jeffery Stegenga, the company’s restructuring officer, said in a court filing.
Blockbuster, which has about 3,000 stores in the U.S., has been hurt by Netflix and other Video On Demand services, as well as Redbox DVD machines. In September 2009, Blockbuster said it would close up to 960 stores in the U.S. by the end of 2010, leaving it with about 20 percent fewer stores.
After it emerges from bankruptcy, the only debt expected to remain on Blockbuster’s balance sheet will be the $125 million loan.
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