Studio wants rental chain to pony up $9.5 million in fees and debts
Summit wants bankrupt Blockbuster to pony up $9.5 million in unpaid bills or else liquidate its assets.
In motion filed Thursday in New York Bankruptcy Court, the studio behind "The Twilight Saga" claims that the rental chain owes money for Blu-rays and DVDs of "RED" and "The Twilight Saga: Eclipse" that it ordered after it went into Chapter 11 last fall.
"…What is abundantly clear is that the Debtors must be stopped from continuing to mount administrative expense obligations to the detriment of all creditors and paying only those that they deem worthy," the suit reads.
Facing stiff competition from Netflix and Redbox, Blockbuster labored under nearly $1 billion in debt for much of the past year before finally filing for bankruptcy. Now, the company plans to close more than a third of its 3,000 stores as part of a massive reorganization. It has secured $175 million from Carl Icahn and other investors to enable it to keep operating while it goes through bankruptcy.
If Blockbuster is forced into liquidation, a trustee will assume control of the company.
As part of Blockbuster's bankruptcy filing, the court allowed the chain to enter into agreements with the various studios that would keep them supplied with new releases. Summit says, however, that Blockbuster has been unable to pay for the discs it ordered.
"To Summit's surprise and dismay, the debtors informed Summit that the debtors would not pay Summit with respect to products that were shipped post-petition because the debtors lacked the funds to do so," the claim reads.
If Blockbuster fails to pay its bills, Summit wants the chain to send back its discs. In the filing, Summit alleges that Blockbuster stands to earn over $8 million from "Eclipse."
"It is unjust for the Court to permit these Chapter 11 cases to be financed 'on the backs' of administrative creditors for the sole benefit of lenders who have reaped, and will continue to reap, the benefit of unpaid-for goods and services," the filing reads.
A spokesperson for Summit declined to comment on pending legal matters and a spokesperson for Blockbuster did not immediately respond to TheWrap's requests.
Summit alleges that Blockbuster owes it $6.8 million for the discs it shipped after the company filed for bankruptcy. When Blockbuster filed for Chapter 11 protections last September it said it owed the "Twilight" studio $3 million.