Bronson Law Offices - Westchester County Articles Judge To Rule On Blockbuster Bankruptcy

Judge To Rule On Blockbuster Bankruptcy

By Bronson Law Offices  Apr. 5, 2011 2:30p

Creditors Seek To Convert Case To Chapter 7 Filing

If movie studios have their way, popular rental chain Blockbuster Inc. could be liquidated to pay the ailing company’s debts, reports the Wall Street Journal.

A new plan proposed by senior bondholders would save the company by allowing them to avoid Chapter 7 liquidation, keeping the rental chain alive by auctioning off ownership, with an initial bid of $290 million proposed by a group of investors led by Monarch Alternative Capital, a hedge fund based in New York. This plan is opposed by the studios, which are asking the US Bankruptcy Judge overseeing the case to reject the idea and convert to Chapter 7.

The main support for the proposed conversion is led by Summit Entertainment, best known for the “Twilight” series of films, and famous movie mogul Warner Bros. The studios believe that they are owed special re-payment rights due to deals signed with Blockbuster over DVD shipments. They favor liquidation as a quick way to repay the debts owed them and cut their losses with the company, which has found itself in financial difficulties with the rise of internet movie rental companies like Netflix. Warner Bros alone reports that Blockbuster owes them $20 million for DVDs, and the company posted a net loss between September and January of more than $60 million.

The liquidation deal would shut the chain’s 5,000 stores down, with a loss of 20,000 jobs. By switching the claim to Chapter 7, the rental store would be forced to sell of it’s assets to repay the debt.

Seek A Bankruptcy Attorney Today

If you or a loved one is faced with financial debt or insolvency, you need the help of a qualified Bronx bankruptcy attorney! Declaring bankruptcy can end creditor harassment and help you get a new lease on your life. At Bronson Law Offices, we specialize in bankruptcy law, helping every client make the financial decisions that are right for each individual situation. Call our firm and speak with our legal team today!

Contact a Bronx Chapter 7 bankruptcy lawyer to discuss you options.

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