It always seemed to be a question of when Blockbuster would file for bankruptcy protection and now it's official.
The movie and game retailer has filed for Chapter 11 bankruptcy protection after reaching an agreement with a group of bondholders to reduce its debt from its current $900 million to $100 million or less. It has also reached a deal for $125 million in financing from noteholders.
The company said that it plans to keep all of its U.S. operations including its 3,000 stores, vending kiosks, digital downloads and mail service operating normally for the time being although it is clear significant changes will be needed for Blockbuster to reduce its debt level.
A company press release added: "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."
Blockbuster said operations in Canada, Denmark, Italy, Mexico, and the United Kingdom would remain as-is, but that it would no longer fund its business in Argentina.
"The process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers," said Jim Keyes, chairman and dhief executive officer of Blockbuster, in a statement. "The recapitalized Blockbuster will move forward better able to leverage its strong strategic position, including a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels -- stores, kiosks, by-mail and digital. This variety of delivery channels provides unrivaled convenience, service, and value for our customers."
Blockbuster said it will also continue with a program that gives its customers the opportunity to rent new releases 28 days before its main competitors.
Discussion Question: What do you see in the future for Blockbuster now that it has filed for Chapter 11 bankruptcy protection?