Bankruptcy Is Blockbuster's Only Hope
Edward Neiger, bankruptcy attorney and founder of Neiger LLP, says the probability of Blockbuster filing for bankruptcy is about 75%. He expects the company is currently in frantic talks with their debt holders and if they don't agree on a resolution Blockbuster won't have any other choice. And even if the two parties do renegotiate the term of its debt agreement, there is still a chance Blockbuster could file Chapter 11.
Neiger expects a bankruptcy filing to come in the second or third quarter.
Blockbuster will likely use the filing as a platform to renegotiate terms with its existing senior debt holders, reject or renegotiate terms with a large number of its store landlords and liquidate non-core assets," says Kenneth Latz, director at Conway MacKenzie, a financial and operational consulting firm. "I would imagine that the holders of the existing subordinated notes will ultimately end up owning the majority of the business."
So if bankruptcy is imminent, what then will become of Blockbuster? Well, that all depends on the terms of the bankruptcy.
Latz does not think a pre-packaged bankruptcy is likely or there is any possiblity of settling outside of court. "It would be unwise for Blockbuster to just deal with the debt holders and not address the vast store overhead or their operational issues," he says. If they were to do this, it is likely Blockbuster will be staring at Chapter 22 down the road, Latz says, which often means liquidation. -- Reported by Jeanine Poggi in New York.Follow TheStreet.com on Twitter and become a fan on Facebook.
Select the service that is right for you!
COMPARE ALL SERVICESAction Alerts PLUS
TRY IT FREEJim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
Product Features:
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Dividend Stock Advisor
TRY IT FREENew! $49.95/yr
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Product Features:
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Stocks Under $10
TRY IT FREEDavid Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
Product Features:
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
- Weekly roundups
Real Money
TRY IT FREE24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
Product Features:
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
Real Money Pro
TRY IT FREEAll of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
Product Features:
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Options Profits
TRY IT FREEOur options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
Product Features:
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV
