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Finance

Blockbuster officially files for bankruptcy in US

Thu 23 Sep 2010 11:21am GMT / 7:21am EDT / 4:21am PDT
BusinessFinance

Retailer attempts to cut debt from $1bn to $100 million

Blockbuster has filed for chapter 11 bankruptcy protection in the US in an effort to stem out of control debts and allow for restructuring.

None of Blockbusters' operations outside the US will be affected as they operate as legally separate business entities. Blockbuster UK was recently said to be in "very good shape" by its management, and saw an 18 per cent rise in profits during 2009.

A recapitalisation program is expected to cut Blockbuster's debt from nearly $1 billion (638m) to a more manageable $100 million (63.8m).

Normal business will continue across the company's portfolio in the US, with stores, online and kiosks remaining open and operational. There are currently no plans to close any of the 3000 stores in the US in the near future, said the company.

"After a careful and thorough analysis, we determined that the process announced today provides the optimal path for recapitalising our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customer," said Blockbuster CEO Jim Keyes.

"The recapitalised Blockbuster will move forward better able to leverage its strong strategic position, including a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels - stores, kiosks, by-mail and digital."

The company has secured $125 million (80m) from senior creditors to ensure obligations to customers, suppliers and employees are met during the recapitalisation process.

11 Comments

Ben Furneaux Designer, Turbulenz Limited

116 55 0.5
Does this mean I won't have to pay my late fees?

Posted:4 years ago

#1

Terence Gage Freelance writer

1,288 120 0.1

Posted:4 years ago

#2

Josef Brett Animator

296 0 0.0
I used to work for BB, so i sort of feel this is a shame. However, they charged ridiculous prices for rentals an then failed to respond to competition and online rentail.

Still, I feel sorry for those that will lose thier jobs.

Posted:4 years ago

#3

Terence Gage Freelance writer

1,288 120 0.1
Yeah; you always get the feeling that when big companies like this are usurped by online upstarts (in Blockbuster US's case, I would assume Netflix have taken a lot of their business) that it's their own fault for failing to react to a changing market and use their existing resources to broaden their business avenues.

Posted:4 years ago

#4

Adam Campbell Studying Games Technology, City University London

101 0 0.0
I have sympathy for the employees and the company generally, but I did call the demise of Blockbusters 2 years ago (with almost absolute certainty), simply for being far overpriced, having too many stores and the increasing competition they didn't respond to. I wouldn't be surprised if this affects the company further a' field than the US.

Posted:4 years ago

#5

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Between Netflix, Redbox. Gamefly and my library (check out movies for free), I've not stepped into a Blockbuster in years.

I'm actually quite surprised it has taken them this long to file Chapter 11.

Posted:4 years ago

#6

Robin Smith indie journalist

2 0 0.0
ive always found renting from a store better then using an internet based option. I hope this doesnt have a negative effect in the uk just yet.

Posted:4 years ago

#7

Miguel Melo Software Engineer

65 0 0.0
They folded here in Portugal about 6 months ago. It's a shame, but they didn't really make an effort to keep up with the times.

Posted:4 years ago

#8

Private Industry

1,176 182 0.2
Dept of 1 billion? Bloody hell how do you get the dept up so high?


Usually go rather with store rentals, one reason might be online rental is not very good here in Europe. Since I usually rent Blu Ray movies it makes more sense even if online rental would be better here as the picture and sound quality is in general always better than the streamed one.

Posted:4 years ago

#9

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
The reduction in price of decent enough quality DVDs from supermarkets and online delivery simply negates the need for a huge rental market like before. I don't know why they don't partner up with the businesses like Dominos and the like, and attempt to sell into the experience of "a night in". Same as the cinemas do for a "night out" with Pizza express etc. Just needs some imagination to make attractive, easy options for customers.

Posted:4 years ago

#10

Shane Sweeney Academic

396 407 1.0
They should adapt or die.

Actually thats a bit harsh, they did team up with Enron to provide streaming movies pay on demand to users in 1998........

Posted:4 years ago

#11

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