Biz Brief: Is Blockbuster on the Verge of Filing for Bankruptcy?


Blockbuster (BBI) is in discussions with its bondholders to get up to $150 million in so-called debtor-in-possession financing, The Wall Street Journal reported Friday, citing unnamed sources.

The fact that the struggling video chain is seeking the loan is a sign that the company, which is more than $900 million in debt, could soon seek Chapter 11 bankruptcy protection from its creditors, the newspaper reported. Debtor-in-possession financing is used to help companies operate while under bankruptcy-court protection and typically carry high-interest rates. The talks don't necessarily mean Blockbuster will file for bankruptcy, since troubled companies frequently negotiate bankruptcy loans as a precautionary measure, the Journal noted.

Separately, the company is also seeking a fresh infusion of cash from a group of bondholders whose debt would be converted to equity. One such investor could be ATM manufacturer NCR (NCR), which provides Blockbuster with its Blockbuster Express vending machines, the newspaper said.

Originally published