THE US arm of video and games rental store Blockbuster filed for bankruptcy yesterday in an attempt to cut its debts and restructure its business.
The company has been struggling to meet payments on debts of $1bn (£637m). Agreements with its creditors will now allow the company to reduce the debt to $100m.
Blockbuster said the bankruptcy did not include its non-US operations. It has some 4,000 stores in the UK, Canada, Denmark, Italy and Mexico.
Jim Keyes, Blockbuster’s chief executive, said the company would now be able to recapitalise its balance sheet and transform its business model to “meet the evolving preferences of our customers,”
Blockbusters was slow to react to competition from the online rental market. It launched its own online subscription service in 2004 but was already several years behind the US market leader, Netflix, which launched in 1999.