Once the world’s most renowned video rental store but now reduced to ruins – Blockbuster have filed for bankruptcy in the USA in attempts to cut its debts and restructure the firm to ultimately provide long-term business recovery.

Agreements with its creditors will allow it to cut its debts from nearly $1bn to about $100m. Blockbuster’s non-US operations are not included in the bankruptcy, including its 4,000-wide network of stores in the UK, Canada, Denmark, Italy and Mexico.

‘Blockbuster’s 3,000 stores in the US will remain open for the time being,’ the company’s statement said. It has also secured a new $125m loan it says will allow it to keep working during the restructuring process.

“The process announced today provides the optimal path for recapitalising 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,” Jim Keyes, Blockbuster’s chief executive said.

Analysts say Blockbuster has struggled with the increased competition in the online rental market in recent years. Other competitors have since entered the market, offering films and DVDs through postal delivery, vending machines and via online streaming.

“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,” Keyes added.

It’s almost two years to the day since the Lehman Brothers became the world’s biggest bankruptcy of all time, with billions of dollars in cash, 500 employees, real estate and investments in other bankruptcies which left a knock-on effect felt around the globe.

But the company, Lehman Brothers Holdings Inc., have completed their road to business recovery and are back after their 24 month absence.

The defunct New York-based investment bank has almost $20 billion in cash and a monthly payroll of up to $45 million for managers and other key staff.

The news comes as the number for bankruptcy claims that traded sank to a year low in August as more large firms emerged from Chapter 11 and transfers of claims against Lehman Brothers Holding Inc calmed.

The total number of claims traded slumped to 656 from 729in July, according to data from SecondMarket, which runs a bankruptcy claims trading exchange.

The value of the claims plummeted to $2.65 billion from$12.7 billion in July. However, the July figure was inflated bya few huge trades in claims stemming from the Lehman Brothers bankruptcy.

The August value was within the typical $2 billion to $3billion range that has marked trading over the past six months.