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.