• 01
  • October
    2010

In an earlier post at the end of August, we wrote that Blockbuster was considering filing for Chapter 11 protection. At the time, Blockbuster said that it had warned its shareholders that it was considering filing for bankruptcy to reorganize its $1 billion in debts. It seems that Blockbuster decided that filing for bankruptcy was its best option after all as it filed for Chapter 11 protection on September 23 in New York.

The Economist published a recent article on Blockbuster's situation. They comment in their article that ten or so years ago everyone thought that "clicks-and-mortar" stores would do better overall with consumers than simply bricks-and-mortar or simply online stores. Blockbuster's recent financial troubles, however, as well as the continued business success of Netflix may have finally proved that theory wrong.

 

According to The Economist, Blockbuster also had a hard time surviving in the place in-between the successful and high-tech "clicks" company, Netflix, as well as the very low-tech "bricks" store, Redbox. The recession was the final straw for the company, but it will be back to try again after its reorganization.

Through filing for Chapter 11 protection, Blockbuster is aiming to reduce its debts by $900 million. It will also probably close some of its 3,000 U.S. store locations. Blockbuster stores and operations outside the U.S. are not affected by the U.S. bankruptcy filing. Its franchise stores are also not affected by the filing.

Source:

From Blockbuster to turkey (The Economist)