Blockbuster Saved From Liquidation By Chapter 7
By Bronson Law Offices
Apr. 5, 2011 2:38p
Trouble Arises For Rental Service Thanks To New Technology
A New York Bankruptcy Court Judge ruled in favor of a plan that will keep Blockbuster afloat, saving the rental chain from being liquidated to pay it’s debts, the Dallas Morning News reports.
The chain has been in financial trouble for the past few years, unable to compete with the new business models represented by the rise of high-tech Internet DVD rental services such a Netflix and low-tech services like Redbox. The ailing company reported a net loss of $64.8 million between September and January last year.
Creditors such as several prominent movie studios have demanded that Blockbuster be liquidated under Chapter 7 in order to pay the debts owed for DVD’s shipped to the 5,000 stores the chain currently operates, with Warner Bros alleging a debt of $20 million alone.
Judge Agrees To New Debt Repayment Plan
After heated negotiations at the hearing, the creditors and debtor agreed to a new plan in which the company would be sold at auction, with an initial bid setting the price floor at $290 million.
The studios eventually relented on their push for liquidation because, they say, they are currently unsure what would replace the significant revenue that the ailing company still manages to pull in. Though they have rapidly lost market share to the new competitors, Blockbuster still sells billions of dollars worth of DVDs that the studios would not be able to otherwise move. They agreed that selling the company was the best compromise, rather than forcing them into a Chapter 7 liquidation that would assuage short-term debts but cause more ling term problems.
Speak With A Bankruptcy Expert
The legal issues underlying bankruptcy are extremely complex and difficult to navigate. A Queens bankruptcy attorney, however, can help guide you through this frustrating process and help you start fresh and debt-free. At Bronson Law Offices, our team understands the weight that debt can burden you with, and we make it our mission to help you beat your debt and move on with your life.
Contact a Queens Chapter 7 bankruptcy lawyer without delay!
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