Blockbuster Bankruptcy Rumors Heating Up Again

Blockbuster Bankruptcy Rumors Heating Up Again

Blockbuster Bankruptcy Rumors Heating Up Again

The movie rental giant Blockbuster is in dire financial trouble.  It was recently announced that company management met with many of the big studios in Hollywood to inform them about Blockbuster’s impending bankruptcy filing.  The company is facing massive amounts of debt, and says it needs to begin a restructuring immediately to stay solvent.  Any restructuring of capital could involve Blockbuster filing for chapter 11 bankruptcy.

The rise of services such as Netflix, Amazon, and on-demand video services has left Blockbuster in a bind.  Once one of the biggest players in video rentals, Blockbuster has not been able to keep up with the low prices, popularity, and convenience that other rental services can offer.  There have been rumors for months that bankruptcy was a real possibility for Blockbuster.  When the company’s stock was de-indexed from the New York Stock Exchange because of stocks valued under $1, it became clear that Blockbuster would be undergoing significant changes.

Blockbuster closed nearly 1,000 stores last year.  A bankruptcy filing would let the company out of leases for at least 500 of its nearly 3,500 stores.  Getting out from under contracted leases would allow the company to close hundreds more stores as part of its financial restructuring.  Blockbuster has not officially announced that it will be filing a bankruptcy claim.  The company is hopeful that they will be able to re-allocate capital resources to avoid a bankruptcy filing.  Nonetheless, the company is preparing all of those concerned for the news that bankruptcy is a real option.


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