Blockbuster Starts Bankruptcy Sell-off Process

In what is undoubtedly a living example of the end of an era in our time, Blockbuster Inc, which once dominated the home movie rental industry but filed for bankruptcy last year, announced this week that it started the sell-off process and has entered into an agreement with Cobalt Video Holdco. The amount? $290 million dollars. According to the news report, Cobalt is simply an LLC formed by a conglomerate of funds managed by various corporate partners. The bid by Cobalt is more or less a dare to other companies to match or exceed it and gauges the interest of other parties while establishing a defined starting point of interest for the bidder.

The purchase bid will include acquiring nearly all of the assets of Blockbuster and its U.S. and international subsidiaries and the company has filed a motion seeking bankruptcy court approval so that they can conduct an auction designed to get the best price for the assets. If approved, we can expect binding bids to roll in within 30 days. Approval of the sale is expected as early as April of this year and this includes all of the assets, including storefronts, kiosks, the DVD-by-mail business and the lunch box (maybe not that last one).

This all sounds pretty procedural and regular, but you know it's getting bad when a motion is filed to allow skiddish landlords to collect rent or boot the company out of 38 locations. Even certain content producers are suiing for unpaid bills - case in point, the studio behind "Twilight" has asked that the company pay its bills or liquidate. Since the bankruptcy filing, the company is stuck in a position of owing literally millions to various venders.

From the AP article:

The bankruptcy court previously allowed the company to borrow $125 million to pay for operations while it was under Chapter 11. The loan was provided by billionaire investor Carl Icahn and a group of hedge funds. The company filed for bankruptcy with a plan to swap its senior secured bonds, which are owned by Icahn and the group of hedge funds, for ownership of the company. Blockbuster has not met deadlines for providing details on its reorganization plan as originally planned when it filed for bankruptcy.