Blockbuster Files For Bankruptcy

Blockbuster Inc (OTC: BLOKA) announced that it has filed for bankruptcy after reaching an agreement with bondholders to recapitalize the firm. BLOKA said that it has filed Chapter 11 petitions in the US Bankruptcy Court of the Southern District of New York. The move does not involve the firm's non-US operations or the group's franchisees.

According to the deal, bondholders will be able to exchange their secured notes for equity of the restructured Blockbuster. The deal will reduce the company's liabilities from around $1 billion to about $100 million. Holders of subordinated debt, common stock and preferred stock would not get anything, according to the plan. All 3,000 US stores of Blockbuster will remain open, though the US store portfolio will be evaluated in an attempt to enhance the firm's profitability.

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