Blockbuster files for bankruptcy

Chapter 11 protection will allow the video-rental chain to cut nearly $900 million in debt and continue store operations, but it leaves shareholders empty-handed.

By TheStreet Staff Sep 23, 2010 8:31AM

By Jeanine Poggi, TheStreet

 

The long-awaited Blockbuster (BLOKA) bankruptcy filing came in the wee hours this morning. The Chapter 11 restructuring will allow the company to cut debt by nearly $900 million while continuing to operate stores and kiosks.

 

Shareholders and investors holding subordinate debt -- who stuck by the company through the past year of bankruptcy scares and ongoing discussions -- are out of luck.

 

More than 80% of the company's senior noteholders have agreed to support the plan and provide $125 million in "debtor-in-possession" financing to help support Blockbuster's operations while it undergoes the restructure. Under the plan, bonds will be converted into equity.

 

The restructure does not include Blockbuster's international operations, and in a separate release Blockbuster Canada said business will go on as usual.

Blockbuster has been struggling to make debt payments, pushing off a $42 million payment two times over the summer. It was scheduled to make that payment on Sept. 30.

 

While right now Blockbuster will continue operations, the company did say it will re-evaluate its portfolio of more than 3,000 stores.

 

Rival Movie Gallery filed for Chapter 11 protection earlier in the year but ultimately ended up liquidating its assets.

 

Related Articles

9Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.

The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY