Blockbuster has told the major studios that it plans to file for bankruptcy next month, TheWrap has confirmed.
The mid-September filing makes strategic sense, since that's when Blockbuster is scheduled to make a $42 million debt payment. The rental company has been warding off bankruptcy rumors as it labors under more than $1 billion
Last week, Blockbuster CEO Jim Keyes held a series of meetings in Los Angeles with executives at Paramount, Warner Brothers, Sony, Universal and 20th Century Fox, individuals familiar with the talks told TheWrap. Keyes discussed how the company planned to restructure during a possible Chapter 11.
Also covered were terms regarding how the Dallas-based company would continue to get new DVDs and streaming content from the studios for its stores, kiosks and online business.
“Blockbuster has been one of our biggest customers, and if they go away it would compromise a major distribution stream,” an individual with knowledge of the talks told TheWrap. “So we’re willing to work with them.”
Blockbuster would not confirm that the talks had taken place, but Rebecca Fannin, a company, spokesperson told TheWrap, “We have every reason to believe we will come out of the recapitalization process financially stronger and more competitively positioned for the future.”
Blockbuster has closed nearly 1,000 stores over the last year. It hopes to use the bankruptcy period to get out of costly leases on hundreds of underperforming stores.
News of Blockbuster’s meetings was first reported in the Los Angeles Times.