Blockbuster: No Bankruptcy Plans

Blockbuster (BBI) denies hiring Kirkland & Ellis to explore bankruptcy, and instead K&E's role will be to assist with refinancing. We do have our doubts as usually every K&E involvement ends up in a monthly retainer filed on Whitehall Street, but we'll go with the company on this one.

Bloomberg amends its prior release:

“We’ve hired them for refinancing and capital raising initiatives,” said Karen Raskopf, a Blockbuster spokeswoman..“We do not intend to file for bankruptcy.”

Blockbuster is working with Kirkland and Ellis on refinancing, Raskopf said. The company previously announced plans to fund its own operations through the end of 2009 after two of its credit facilities expire this August, she said.

“Balance sheet issues are easily solved with a prepackaged or prearranged bankruptcy,” said Paul Silverstein, a lawyer with Andrews & Kurth LLP, [ed. and a distinguished cigar aficionado in legal circles] who has no connection to Blockbuster. Silverstein, speaking in a phone interview, said operational issues and business problems are less easily solved with such filings.

Tiffany Kary, who allegedly has a penchant for traipsing around bankruptcy court in skin tight pants and other provocative clothing and who wrote the original article, may soon incur the wrath of retail shareholders who sold their holdings at an 80% discount after her earlier, poorly-phrased article, made it seem that bankruptcy is a certainty. The only redeeming event would be if BBI were to really file for bankruptcy now before the class action suits start flying (however looking at BBI's Yahoo message boards, class action lawyers are already pitching their services).

Comments

[Sekar:]

Blockbuster's earlier CEO John Antioco was one of the biggest corporate idiots, joining the ranks of disgraced and fallen guys like Jack Welch (GE is now $6), Charles Prince, Immelt and numerous idiots. The current 7-Eleven savior has no clue on how to run this business. Are the board members in a drunk state? Blockbuster will eventually collapse. Hollywood studios are going to realize that their tight grip over content distribution will come to an end sooner than they think. Customers are not willing to pay $4 to rent movies and watch. Movie distribution and consumption will go the way like music has become and no one has time to step into a store to checkout content. How much will I pay to watch a movie? Not more than 50 cents. The studios and their overpaid stars should realize that sky high production costs will eventually kill movie distribution. The entire movie industry requires a shake-out and the time is right now. Look at how many stuios have scrapped costly productions. The country has plenty of talented faces and studios should promote new blood in movies rather than overpaying existing actors. That way production cost will reduce and consumers can pay less to watch a movie. The collapse of Blockbuster will be a death knell to retail movie distribution in US.

Mar 04 10:39 AM