It’s official. A quarter-century after being founded in Dallas, Blockbuster has filed for bankruptcy. Early this morning, Blockbuster announced the company and its U-S subsidiaries have filed voluntary Chapter 11 petitions with the U-S Bankruptcy Court for the Southern District of New York. Blockbuster’s business model of renting video’s and DVD’s from brick-and-mortar stores has become increasingly obsolete as customers have grown fond of receiving their movies through downloads or via the mail, a model pioneered by a leading competitor, NetFlix. Reaching a deal with a group of bond-holders, Blockbuster plans to reduce its debt from more than 900-million dollars down to 100-million, or even less, by exchanging debt for equity in the re-organized company. The first Blockbuster store opened in Dallas in 1985 at the corner of Skillman and Northwest Highway.
Here’s the company’s statement on the Chapter 11 filing:
Blockbuster Continues to Offer the Best, Most Convenient
Access to Hot New Releases Through Its 28-Day Advantage
and Multi-Channel Platform
DALLAS, September 23, 2010 – Blockbuster Inc. (OTHER OTC: BLOKA, BLOKB), a leading provider of media entertainment, is continuing to serve customers as usual as the Company takes action to become financially stronger to enhance its ability to provide the best, most convenient access to movies, TV and games.
- Blockbuster is open and serving customers. Through its stores, by-mail and digital businesses, Blockbuster is continuing to provide day-and-date, multi-channel access to new releases and fulfilling all orders as usual.
- BLOCKBUSTER Express vending kiosks, owned and operated through a relationship with NCR, also continue their operations in retail locations around the U.S.
- Blockbuster’s 28-day rental advantage continues. In addition to Blockbuster’s access to new releases as soon as they are available, we offer our customers the additional benefit of rental access to nearly 50 percent of those new releases 28 days before our top competitors are able to do so.
- The BLOCKBUSTER RewardsTM program remains in effect, and participating customers are continuing to accrue benefits and rewards as always.
- Blockbuster is continuing to honor BLOCKBUSTER GiftCards® as usual and will continue to make Blockbuster GiftCards® available for purchase.
- Store credits and valid coupons will be honored as usual.
Jim Keyes, Chairman and Chief Executive Officer, said, “For more than 25 years, Blockbuster has been the go-to source for the best selection of at-home movies and game entertainment. We are continuing to provide our customers with the same outstanding convenience, service and value that have defined Blockbuster from the start, while we take action to become financially stronger. We look forward to continuing to provide our customers with the best, most convenient access to brand new releases and to continuing to enhance the Blockbuster experience.”
Blockbuster today announced that it has reached agreement on the framework of a plan to recapitalize its balance sheet and has initiated Chapter 11 proceedings to implement this plan. Under the proposed recapitalization, Blockbuster would substantially reduce its debt and improve its financial condition.