Blockbuster Inc., once the dominant movie rental company in the U. S., filed for Chapter 11 bankruptcy protection on Thursday, reeling from mounting losses, rising debt and competitors that have better catered to Americans’ changed media habits.
Mae Anderson | Huffingtonpost.com
For now, Blockbuster will continue to operate its 3,300 U.S. stores, although analysts expect hundreds of them to close under new owners led by billionaire investor Carl Icahn. The Dallas-based company has about 25,500 employees, including 7,500 full-time workers.
The prepackaged bankruptcy case, in the works since the spring, marks the end of an era that Blockbuster and its gold-and-blue torn ticket logo helped establish. Americans used to troop to video stores on Friday for the latest movies. Now, they’re skipping Blockbuster and watching movies from DVD-by-mail services like Netflix Inc., cable video on demand and Redbox vending machines.
The bankruptcy, filed in New York, will wipe out Blockbuster’s badly battered stock, which was delisted from the New York Stock Exchange two months ago because it was nearly worthless.
Icahn and his group own 80 percent of top-priority Blockbuster debt, with a face value of $675 million. Under the proposed reorganization plan, they will get new stock and control of Blockbuster’s board in return for forgiving the debt.