Blockbuster Goes Bankrupt [Blockbuster Officially Files Chapter 11 to Reduce Indebtedness]

Posted on TFTS by Brian Yalung on Saturday, 25. September 2010 under: Internet Highlights

The American rental chain giant Blockbuster has officially filed for Chapter 11 to try and fend off its “indebtedness“. Rumors about Blockbuster’s impending demise came out early last month and now all those rumors are confirmed as they reach an agreement to recapitalize their balance sheet and reduce their debt.

As per their pre-arranged chapter 11 setup, Blockbuster will try to reduce its $1 billion debt to about $100 million once implemented.

However, Blockbuster stores will still remain open as they currently evaluate their US store portfolio as part of the recapitalization process.

All their 3,000 stores will remain open although critics believe that about 1,000 stores could be closed before everything settles down.

Blockbuster is now in “restructuring mode” and 11 3/4 % senior secured notes will reportedly be exchanged for equity.

The only debt expected to remain on the Company’s balance sheet once it does re-emerge will be the amounts drawn under Blockbuster’s $125 million DIP financing.

The Company has secured a commitment of $125 million in new “debtor-in-possession” (DIP) financing from the Senior Noteholders.

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