Blockbuster granted more time to plan

 
City A.M. Reporter
VIDEO rental chain Blockbuster said yesterday that it had received an additional three weeks from its lenders to file a bankruptcy reorganisation plan.

The company received an extension to 4 February from 14 January to file a plan, a regulatory filing shows.

It is common for debtors to seek such extensions, and US bankruptcy courts routinely grant them.

Blockbuster disclosed the extension after reports that the company had asked its bondholders for an additional $200m-$250m (£125m-£156m) to help fund its exit from bankruptcy.

The bondholders, led by billionaire investor Carl Icahn and hedge fund Monarch Alternative Capital, have not decided whether to provide the funds or put the Dallas-based company up for sale.

Blockbuster may also close as many as 1,000 of its more than 5,000 remaining stores following a weak holiday season.

Blockbuster filed for bankruptcy in September, weighed down by its debts and stung by video-on-demand and competitors such as mail-order pioneer Netflix and Redbox, a Coinstar unit that rents movies through kiosks.

Blockbuster has closed about 1,000 stores in recent years as it tries to cut costs, but still had about 2,900 in the US when it filed for bankruptcy.

As part of its reorganisation the company is renegotiating leases with thousands of landlords.

The company hopes to emerge from bankruptcy by the beginning of the second quarter of this year, with fewer but more profitable stores.

The company entered bankruptcy with a plan that would put billionaire investor Carl Icahn and his hedge fund partners in control of the company when it emerges.

According to court reports, a group of shareholders in Blockbuster are considering an investment in the bankrupt video chain and want information about its push into digital.

Under the current plan, the company would wipe away most of its $1bn of debt by giving the company’s equity to its secured bondholders. Most of the company’s $665m in secured bonds is held by the Icahn group.