NEW YORK ( TheStreet) -- The long-awaited Blockbuster ( BLOKA.PK) bankruptcy filing came in the wee hours this morning. For the company, the Ch.11 restructuring will allow them to cut debt by nearly $900 million while continuing to operate stores and kiosks. For shareholders and investors holding subordinate debt, who stuck by the company through the past year of bankruptcy scares and ongoing discussions, well they are out of luck. Shareholders have complained they have been left in the dark throughout this process, and have set up a forum, BlockbusterShareholder.com, to vent these frustrations. One shareholder, Niko Celentano, sent a letter to CEO Jim Keyes last month, after reports surfaced that a bankruptcy filing was imminent. In the letter he said "With the news out now that Blockbuster is looking to file a bankruptcy, you have left us no choice but to prepare our legal representation should this occur and we as shareholders, not be included in any settlements. Please understand this loyal group of shareholders has stuck with the company through this tough time and fully expect to be part of the turnaround that is ahead."
Now shareholders are demanding CEO Jim Keyes resign. Celentano sent an e-mail this morning to the company: "Jim Keyes and all involved will be held accountable for their actions that led to this today," he writes. "Jim Keyes and his BOD's have failed all shareholders in their fiduciary responsibilities due to them. Jim Keyes is the main reason Blockbuster is in this position today due to his denial of being in a business model that did not work anymore. If Jim Keyes would have seen the changes that were evolving in this industry in the past few years Blockbuster would not have been in the courts today filing Chapter 11 bk protection.... Jim Keyes has failed in his job as CEO of Blockbuster and should resign immediately." More than 80% of the company's senior noteholders have agreed to support the plan and provide $125 million in "debtor-in-possession" financing to help support Blockbuster's operations while it undergoes the restructure.