It seems that the formerly monolithic Blockbuster video chain is finally ready to go into Chapter 11 bankruptcy protection, something that has been predicted for months, if not years, at this point.
According to a report from The Wall Street Journal, the Chapter 11 bankruptcy protection filing could come as soon as today, or some time early next week. Right now the finishing touches are being put on the paperwork with minor points being worked out with all of the creditors to try to get the company out of its approximately $900 million dollars of debt.
Blockbuster has long been on the decline thanks to the rise of companies such as Netflix and Redbox. While the company has made numerous changes to try to combat the changing video rental industry, it appears that it all happened just too late to be effective enough to stave off the bankruptcy filing.
According to the report, 1,000 stores are currently slated for closure, but that number could easily increase into the 1,500 to 1,800 range if need be. The plan calls for the company to refocus on its rentals-by-mail and online video aspects, and greatly de-emphasize the brick-and-mortar portions of the company that made it famous.
Apparently $630 million in senior debt, which Carl Icahn of Delorean fame holds a third of, will be converted to equity. The remaining debt will be erased and the common stock, which currently trade over the counter for about $.08, will become worthless.
There is no word on how long the reorginization is expected to last, but I wouldn’t expect this to be a quick turn around.
Will the company actually survive? Who knows, especially when you look at their online plans, but it should be an interesting show to watch.
What say you? Are you rooting for Blockbuster?