The writing is on the wall for fallen titan Blockbuster, and it apparently spells bankruptcy. The Los Angeles Times, citing “people who have been briefed on the matter” is reporting that Blockbuster will be filing for bankruptcy in the middle of September. BB’s move would likely be a “pre-planned bankruptcy,” which means that the majority—but not all—of its debt holders would give their assent before the filing.
As part of the anticipated five-month bankruptcy process, Blockbuster will likely close another 500 to 800 underperforming stores.
The Times is reporting that BB CEO Jim Keyes has held a series of meetings with executives from 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures and Warner Bros. According to the Times, “[Keyes] was joined by a team of restructuring consultants hired to help turn around the struggling company, along with its senior debt holders who would likely end up owning a substantial portion of Blockbuster following bankruptcy.”
A Blockbuster spokeswoman refused to comment on Keyes’ meetings, offering only the following:
“The extension of our forbearance agreement is a strong sign of support from our senior secured noteholders as we work toward putting in place a more appropriate capital structure to support Blockbuster’s long-term growth … Our discussions continue to be productive and we have every reason to believe we will come out of the recapitalization process financially stronger and more competitively positioned for the future.”
Will bankruptcy help Blockbuster get its house in order and allow it to continue as a viable video rental option? Many of the studios certainly hope so, as they want Redbox and Netflix to continue to have a competitor more willing to toe Hollywood’s line. Hit the comments and let us know what you think about the chances of BB going BK.
(via the Los Angeles Times)