NEW YORK (AP) - Troubled video-rental chain Blockbuster Inc. filed for Chapter
11 bankruptcy protection, and said it plans to keep stores and
kiosks open as it reorganizes.
In a submission to the U.S. Bankruptcy Court in the Southern
District of New York on Thursday, the company said it reached an
agreement with bondholders on a recapitalization plan.
Blockbuster plans to reduce debt from nearly $1 billion to about
$100 million or less by swapping debt for equity in a reorganized
Blockbuster with bondholders that hold about 80.1 percent of the
company's senior notes.
It has received commitments for $125 million in
"debtor-in-possession" financing from senior noteholders to repay
customers, suppliers and employees during the reorganization.
"After a careful and thorough analysis, we determined that the
process announced today provides the optimal path for
recapitalizing our balance sheet and positioning Blockbuster for
the future as we continue to transform our business model to meet
the evolving preferences of our customers," said CEO Jim Keyes.
Once a home entertainment powerhouse, Blockbuster has been
losing market share and money for years as more Americans rent DVDs
from subscription service Netflix Inc. and popularity surged for
streaming video over the Internet.
Blockbuster said its 3,000 stores in the U.S., DVD vending
kiosks, by-mail and digital businesses will all continue to operate
normally. Operations outside the U.S. and domestic and
international franchisees are not part of the Chapter 11
Earlier this year the company said it would close hundreds of
stores and said it was struggling with liquidity problems.
The company, which had warned investors it might file for
bankruptcy protection, was delisted in early July by the New York
(Copyright 2010 by The Associated Press. All Rights