Dallas - Blockbuster has filed for Chapter 11 bankruptcy
protection in a pre-packaged plan that would provide more than $1 billion in debt
relief and new financing.
The long-signaled reorganization would put the ailing DVD rental
chain under the ownership of its senior secured debt owners, comprised of
equity investors including former board member Carl Ichan, while shareholders
will lose their stake in the company.
Under the plan, all operations would continue except for
unprofitable stores and Blockbuster's business in Argentina, and over $900
million of the chain's $1 billion in debt would be forgiven. The company would
also receive $125 million in new financing.
The 3,400-store chain has been steadily losing DVD rental market
share to mail and kiosk competitors Netflix and Redbox, and faces even greater
competition from a plethora of digital delivery providers.
The filing, made with the U.S. Bankruptcy Court for the Southern
District of New York, seeks plan approval by March 15.