Blockbuster Inc., the world’s largest movie-rental company, will reject leases and close 18 stores across the U.S., according to court papers. Separately, the company reported a net loss of $36.5 million for the six weeks ending Oct. 31.
Leases in states including Florida, California, Georgia and Illinois are being abandoned as of yesterday, under a court order allowing the bankrupt company to reject unexpired leases, Blockbuster lawyers said in papers in U.S. Bankruptcy Court in New York.
Chief Executive Officer James W. Keyes said in September he would evaluate “every single store” as the company reorganizes to compete with rivals providing movies online and by mail.
The 25-year-old Dallas-based company filed for bankruptcy Sept. 23 after losing sales to Netflix Inc.’s Web and mail-order movie service and Coinstar Inc.’s Redbox DVD rental kiosks.
According to an operating report filed yesterday in court, revenue was $177.8 million for Sept. 23 to Oct. 31, and cash and cash equivalents were $52.2 million.
Blockbuster’s deadline for filing a Chapter 11 plan was extended two weeks to Dec. 15, according to a regulatory filing yesterday.
U.S. Bankruptcy Judge Burton R. Lifland has approved a creditors’ request to investigate the October 2009 refinancing of Blockbuster’s senior notes, the negotiation of the plan support agreement and alternative proposals made to the company.
Creditors can seek documents in an investigation of events before the company’s bankruptcy, including the involvement of investments by Carl Icahn, the billionaire chairman of New York- based Icahn Enterprises LP.
Blockbuster filed under Chapter 11 of the bankruptcy code with the support of lenders who held 80 percent of its secured notes and agreed to finance operations in bankruptcy.
Icahn Partners LP was one of the lenders, which also included Monarch Capital Master Partners LP and Owl Creek Asset Management LP.
The case is In re Blockbuster, 10-14997, U.S. Bankruptcy Court, Southern District of New York.
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