NEW YORK ( TheStreet) -- Now that Blockbuster ( BLOKA.PK) has finally filed for bankruptcy, what's next for the video giant? Blockbuster said business will go on as usual as it whips out its $900 million in debt. This means the 3,000 Blockbuster stores, kiosks, by-mail and digital business will all continue to serve customers. 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. Under the Ch. 11, bonds will be converted into equity.
While Blockbuster did not reveal a timeframe for the restructure, CEO Jim Keyes said the bankruptcy will allow Blockbuster to reemerge, and be better capable of taking one the evolving video market and continue to grow its digital presence. Still, Keyes did note that the company will evaluate its entire portfolio of stores. This year Blockbuster has already shuttered 1,000 stores, and reports have surfaced that another 500 to 800 closures are possible. Blockbuster has been questioned from as far back as 1999, when Amazon ( AMZN) and Netflix ( NFLX) entered the market, about the future of brick-and-mortar stores. In an interview with TheStreet earlier in the year, Keyes said he could "never say never" when it comes to completely shedding stores. Of course, then there is always the worst case scenario. Blockbuster could follow the same path as now defunct Movie Gallery.
After struggling with the same issues as Blockbuster, i.e. digital technology stealing market share, Movie Gallery was forced into Ch. 11 filing in February 2010. At the time Movie Gallery also said that it would continue to operate while in bankruptcy, and continue to pay employee salaries and benefits, honor customer gift cards and store credits, and pay vendors. Then two months later, on April 30, 2010, Movie Gallery announced it was closing and liquidating all of its stores per a Ch. 7 bankruptcy filing. Of course, that was the second bankruptcy filing for Movie Gallery in a three year period. While Blockbuster may have more clout that Movie Gallery's Hollywood Video, this last scenario isn't entirely impossible. What do you think, will Blockbuster be able to emerge a stronger company or fall into oblivion? Take our poll below, and see what TheStreet thinks....
--Written by Jeanine Poggi in New York. >To contact the writer of this article, click here: Jeanine Poggi. >To follow the writer on Twitter, go to http://twitter.com/jpoggi. >To submit a news tip, send an email to: email@example.com.