Blockbuster 'will file for bankruptcy'

VIDEO rental company Blockbuster Inc is expected to file for Chapter 11 bankruptcy overnight, according to a report.

AMERICAN-based video rental company Blockbuster Inc is expected to file for Chapter 11 bankruptcy overnight, Fox Business reported.

The struggling American-based video rental company has been burdened with a heavy US$900 million ($942 million) debt loan and a changing business environment that has made the traditional bricks-and-mortar storefront essentially obsolete.

The move will not impact Blockbuster Australia, which has been financially independent of Blockbuster Inc since 1991.

 

The restructuring plan for Blockbuster Inc has been essentially drafted with only a few small issues left to address, Fox Business said, citing The Wall Street Journal. It is expected that Blockbuster Inc will file a "pre-packaged" bankruptcy plan, allowing the company to re-emerge within months of filing.

Under its new plan, Blockbuster Inc is expected to focus more heavily on its digital-distribution business and close nearly 1000 stores.

Blockbuster Inc has heavily competed against its rival Netflix for business, but has also felt additional pressure from on-demand services from companies such as Apple.

Corporate takeover expert Carl Icahn remains the dominant owner of Blockbuster's debt and is expected to take a major stake in the re-emerged company, the Journal reported.

Shares of Blockbuster Inc trade for pennies on the over-the-counter exchange after being delisted from the New York Stock Exchange earlier this year.