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.