Blockbuster selling movie-rental chain to creditors

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Blockbuster Inc., the movie-rental chain, announced Monday afternoon that it’s selling the business to a group of four creditors who hold more than half of the $630 million in 11.75 percent senior-secured notes.

The purchasers will pay as much as $290 million, subject to adjustment based on variation from the $635 million inventory as of Dec. 31. The maximum price is effectively about $220 million because the buyers will receive Blockbuster’s cash estimated at almost $70 million.

The buyers have no commitment to continue the business. While the contract says 609 stores will begin closing immediately, the buyers can compel a liquidation of the inventory at any stores they don’t elect to take.

The chain currently counts more than 20 stores in the Indianapolis area. The company declined to comment Tuesday morning on whether any of those stores would be among the casualties.

The contract requires a closing of the purchase by April 20. The buyers are Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Varde Partners Inc.

The bankruptcy court in Manhattan already scheduled a hearing on March 2 for approval of procedures for auction and sale. Blockbuster wants the auction 30 days after sale procedures are approved. Competing bids would be due initially three days before the auction. The hearing for approval of the sale is to occur within three days after the auction.

Blockbuster said in a statement it “expects” a majority of the stores, the kiosks, and the mail and digital rental businesses will continue “during the sale process.”

The chain filed for bankruptcy under Chapter 11 in September after negotiating the outline of a debt-for-equity swap with holders of 80 percent of the $630 million in 11.75 percent senior- secured notes. The plan and accompanying disclosure statement never were filed.

Blockbuster said in its court papers Monday that the reorganization effort failed as a result of poor holiday sales, deteriorating operations, and the lack of agreement with noteholders on a long-term business plan. Blockbuster said the plan hashed out before bankruptcy was “not feasible.”

Dallas-based Blockbuster began reorganization in September with 5,600 stores, including 3,300 in the U.S. and the remainder abroad. The chain currently counts about 3,000 U.S. stores, according to a company spokesperson.

The petition listed assets of $1.017 billion against debt of $1.465 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to the secured and subordinated notes.


  • Brownsburg closing
    Brownsburg store told me they were closing mid April and stopping renting effective Thursday.

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  1. I think the poster was being sarcastic and only posting or making fun of what is usually posted on here about anything being built in BR or d'town for that matter.

  2. Great news IRL fans: TURBO the IMS sanctioned movie about slugs running the Indy 500 has caught the Securities and Exchange Commission because Dreamworks had to take a $132MILLION write down...because the movie was such a flop. See, the Indy/IMS magic soiled another pair of drawers. Bwahahahahahaha! How's CARTOWN doing? HAHAHAHA...Indy is for losers.

  3. So disappointed in WIBC. This is the last straw to lose a good local morning program. I used to be able to rely on WIBC to give me good local information, news, weather and traffic on my 45 minute commute.Two incidents when I needed local, accurate information regarding severe weather were the first signs I could not now rely on WIBC. I work weekend 12 hour nights for a downtown hospital. This past winter when we had the worst snowfall in my 50 years of life, I came home on a Sunday morning, went to sleep (because I was to go back in Sunday night for another 12 hour shift), and woke up around 1 p.m. to a house with no electricity. I keep an old battery powered radio around and turned on WIBC to see what was going on with the winter storm and the roads and the power outage. Sigh. Only policital stuff. Not even a break in to update on the winter storm warning. The second weather incident occurred when I was driving home during a severe thunderstorm a few months ago. I had already gotten a call from my husband that a tornado warning was just southwest of where I had been. I turned to WIBC to find out what direction the storm was headed so I could figure out a route home, only to find Rush on the air, and again, no breaking away from this stupidity to give me information. Thank God for my phone, which gave me the warning that I was driving in an area where a tornado was seen. Thanks for nothing WIBC. Good luck to you, Steve! We need more of you and not the politics of hatred that WIBC wants to shove at us. Good thing I have Satellite radio.

  4. I read the retail roundup article and tried Burritos and Beers tonight. I'm glad I did, for the food was great. Fresh authentic Mexican food. Great seasoning on the carne asada. A must try!!! Thanks for sharing.

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