As Expected, Blockbuster Files for Bankruptcy
Struggling video rental chain Blockbuster has filed for bankruptcy as part of a plan to recapitalize the company and reduce its debt.
The company filed voluntary chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York, Blockbuster said in a statement.
Blockbuster's franchisees and non-U.S. operations were not part of the filing, and all operations will continue business as normal.
"The process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future," CEO Jim Keyes said.
The bankruptcy filing is part of a plan to slash the company's debt from almost $1 billion to an estimated $100 million, Blockbuster said. The company agreed the deal with a group of creditors, who committed $125 million of new financing and will exchange their bonds for shares in the newly organized company.