Blockbuster pre-planned bankruptcy tipped amid $920m debt

Chris Davies - Aug 27, 2010, 2:32 am CDT
Blockbuster pre-planned bankruptcy tipped amid $920m debt

Blockbuster are tipped to be readying for “pre-planned” bankruptcy in mid-September, hoping to use the time for severe financial restructuring and breaking leases on 500-800 of the media rental company’s 3,425 bricks & mortar stores.  The news comes from sources close to Blockbuster’s negotiations with the six major film studios, speaking the LA Times; Blockbuster – and their “senior debt holders” – have apparently been meeting with the studios to discuss the potential impact and their plans to handle their $920m of debt.

Their fear – or at least one of them – is that the studios will cut of the supply of new DVD content during the process, thus undermining their attempt to claw back financial stability.  Apparently the studios themselves are “believed to be supportive” in the whole, seeing Blockbuster as an important alternative to Netflix and Redbox; however there is also some tension regarding the rental company’s insistence on offering titles simultaneously with DVD sales, something the studios would prefer to stagger.

Blockbuster are believed to be planning a roughly five month bankruptcy period, and afterwards focus on non-retail initiatives such as automated kiosks in other locations.

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