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 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.
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.
[BRIEFING.COM] The major averages have continued their rebound with the Nasdaq (+0.2%) climbing into the green thanks to the relative strength of the technology sector (+0.2%).
Chipmakers have fueled a good portion of the rebound while top-weighted tech components remain somewhat mixed. Intel (INTC 24.83, +0.10) is higher by 0.4% while the broader PHLX Semiconductor Index trades up 0.5%.
Technology notwithstanding, the energy sector (+0.2%) has also contributed to the ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'