Blockbuster Bankruptcy: Is It Time to Give Up?
NEW YORK (TheStreet) -- Blockbuster (BLOAQ.PK) is seeking yet more money from creditors as it struggles in bankruptcy court. Now bondholders must decide whether or not to provide another cash infusion or to finally walk away from the company and put it up for sale.
The flailing movie-rental retailer is asking bondholders, led by billionaire investor Carl Icahn and hedge fund Monarch Alternative Capital, for another $200 million to $250 million to be used after it exits bankruptcy protection, according to the Wall Street Journal.
This report came ahead of news out of bankruptcy court this week, as a judge granted the company a three-month extension to submit a restructuring plan. Blockbuster now has until March 21 to file its bankruptcy restructuring plan and until May 20 to solicit votes for that plan.Blockbuster disclosed earlier in the week that it was also granted an additional three weeks from lenders to file a bankruptcy reorganization plan. It now has until Feb. 4 to file a plan that previously was due on Jan. 14. The judge also denied a request by an ad-hoc committee of shareholders to examine Blockbuster documents. The equity holders claimed Blockbuster was undervaluing itself, saying its actually worth more than the $1.2 billion management claims. Separately, the same group of shareholders are also seeking to replace the company's board of directors before the reorganization plan is submitted. The group has signed a request that was submitted to court to elect a new board. "Shareholders have serious doubts on the competence and credibility of James W. Keyes (CEO) and the board of directors," according to a court filing. The court also denied objections by landlords who opposed Blockbuster's process for shutting down its stores. The landlords had called the motion an attempt to gain "unilateral and virtually unrestricted" power to close its stores. Blockbuster filed for bankruptcy protection in late September as it suffocated under nearly $1 billion in debt. Since then it has closed several hundred stores and refocusing its attention on its digital offerings. Given all of this, do you think creditors should fork over more cash or give up on Blockbuster? Take our poll below to learn the consensus of TheStreet....
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