The Blockbuster Video chain has avoided going into Chapter 7 Bankruptcy, but will now instead be sold off in an auction next month.
Blockbuster Video filed for Chapter 11 Bankruptcy protection last Sept., and since that time things have been fairly quiet as to what was happening with the once monolithic company. According to Reuters, the company has been unable to fix its financial woes, and has been in court hearings to possibly be placed in Chapter 7 Bankruptcy which would entail a liquidation of the entire company.
In last minute negotiations between Monarch Capital and the Hollywood film studios that are owed over $100 million in back payments, an agreement was reached that would see Blockbuster sold off in April via an auction. Monarch has already entered an initial bid of $290 million despite Blockbuster having listed assets in excess of $1 billion in its latest quarterly report. Carl Icahn, a famous corporate raider, has been approved to bid in the auction despite some objections by others as he is an insider that sat on the company’s board of directors last year.
Which ever group ends up winning the auction will have the right to do with it as they please once the judge in the case signs off on the deal in a scheduled April 7th hearing. The fate of the company’s remaining 2500 stores will be up to the new owners, but the suspicion is that the company will be broken up and its assets sold separately. In short, it does look like this will be the end of the chain of stores that once seemed inescapable as they dotted the landscape.
With chains such as Movie Gallery already having disappeared, and Blockbuster appearing to be on the verge of total collapse, it truly appears that the days of the mega video rental chains is coming to an end. While there will still be mom & pop stores that specialize in the unusual, I can now easily imagine a day where we regale children with stories of how we used to actually go to a physical store to rent our movies. Game, set and match to Netflix and Redbox.
What do you think? Are video rental chains now a completely endangered species?