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) -- Carl Icahn made a big bet when, as reports claim, he invested in one-third of



debt. But what exactly does Icahn hope to gain from the once video giant gone bankrupt?

The big bet is that Blockbuster will be able to emerge from bankruptcy with nearly no debt and a significantly smaller store base, a more profitable company. And if Blockbuster can stay afloat and keep shuttering locations every year to drive cash flow, Icahn could make out nicely, Wedbush analyst Michael Pachter says.

The hope for Blockbuster is that by closing some locations, it will direct traffic to other stores. This will lower the company's operating expenses since Blockbuster won't have rent expenses, payroll or utilities for those locales.

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And while, for the most part, creditors are not interested in running a company well -- just getting their money back -- Icahn has a genuine interest in seeing Blockbuster live.

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Reports claim Icahn purchased $100 million in debt. If this is true, and Blockbuster continues to shutter stores and turns a profit, Icahn could potentially walk away with $150 million or more, Pachter estimates.

In recent weeks, it also appears that Icahn may have snatched up debt from another movie firm,


. Icahn may use his clout here to give Blockbuster an edge over


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Redbox when it comes to receiving content from the studio, says Jeffrey Rogers, president and chief operating officer of Integra Realty Resources.

Icahn's holding in Blockbuster debt gives him veto power over any restructuring plan. While he may be a thorn in Blockbuster's side, Icahn is a friend to investors and will be looking for any way to get money back in their hands as quickly as possible.

Icahn has had a significant history with Blockbuster. In 2004, Icahn gobbled up shares of the company, intent on seeing a merger between now bankrupt Hollywood Video and Blockbuster -- a deal that never materialized.

Then in May 2005, Icahn waged a successful proxy fight to add himself and two other members to Blockbuster's board of directors. Icahn accused Blockbuster of overpaying then-CEO John Antioco. The battle between the two eventually drove out Antioco.

But it had appeared that Icahn's interest in Blockbuster had died down since bankruptcy scares had emerged. In January, Icahn stepped down from the board of directors, citing Institutional Shareholder Services guidelines regarding how many directorships he can hold.

And as of the end of June, Icahn had slashed his stake in Blockbuster by nearly 80%. In the second quarter, Icahn held just 680,000 shares of the flailing movie rental retailer, down from 3.3 million in the first quarter. In 2004, Icahn held 9.9 million shares worth about $83.9 million.

--Written by Jeanine Poggi in New York.

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