As expected Blockbuster files Bankruptcy.
In August Blockbuster already warned that they might have to file for Bankruptcy in September. Today it happened. Blockbuster announced that it has reached an agreement to recapitalize their Balance Sheet and substantially reduce its indebtedness. The recapitalization plan would substantially reduce the Blockbuster's indebtedness from nearly $1 billion currently to an estimated $100 million or less when implemented.
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To implement this "pre-arranged" recapitalization, the Company and its domestic subsidiaries have filed voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings.
All of Blockbuster's U.S. operations, including its stores, DVD vending kiosks, by-mail and digital businesses, are open and serving customers in the normal course. Blockbuster is fulfilling all orders as usual, including continuing to provide access to new releases the first day they become available. Blockbuster intends to continue honoring its Rewards program, valid coupons, gift cards and other customer programs.
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Blockbuster has now the chance to re-emerge, but the question is how. Netflix and other digital movie rental services have pushed Blockbuster to the wall. The only chance I see is for Blockbuster to take all its brand value and go digital.