The biggest melting ice cube (since Movie Gallery) has just melted: Blockbuster finally accepted the inevitable and filed for Chapter 11 in New York Southern (Case 10-14997, legal: Weil Gotshal, CRO: Alvarez & Marsal). As part of the "pre-arranged" (but not "pre-negotiated") bankruptcy process, "the recapitalization plan would substantially reduce the Company's indebtedness -- from nearly $1 billion currently to an estimated $100 million or less when implemented." The Company has secured a commitment of $125 million in new "debtor-in-possession" (DIP) financing from the Senior Noteholders, chief among who is Carl Icahn, who has built up a major stake in the company's $675 million Sr. Secured notes, which will be converted into post-reorg equity. As the attached affidavit demonstrates, the company had 3,306 total video stores in the US (including franchises), and 2,333 international ones. We are confident that the company's renegotiation of lease payments much lower will only force REITs to surge to all time astronomical highs, because after all, who needs cash flow?
The Org Chart of debtor entities that are actually going bankrupt as part of this Chapter 11 filing are shown on the org chart below. It appears all foreign operations will be bankruptcy-remote. We hope the bondholders managed to sequester their cash in time or oops.
And for those curious as to what Netflix' pre-bankruptcy history will one day look like, we suggest you start reading point 38 (page 15 of 167 in the affidavit below): KEY EVENTS LEADING TO THE CHAPTER 11 CASES AND RESTRUCTURING GOALS