Yesterday in New York, the 25-year-old Blockbuster Inc. filed for bankruptcy after losing sales to Netflix Inc.’s Web and mail-order movie service and Coinstar Inc.’s Redbox DVD rental kiosks.
In the year 2009, the earnings of the Company dropped by 20% to $4.06 billion, after reporting a $558.2 million net loss.
As per a court document, Blockbuster has closed as many as 1,061 U.S. Company-operated stores in the last two years.
The Company said that all the U.S. stores, DVD vending kiosks, mail and digital will operate as usual.
The Company’s Chief Executive Officer James Keyes said that a thorough search of all the stores will be done.
Blockbuster owes 80% debt to billionaire investor Carl Icahn and his group, with a face value of $675 million.
According to the proposed reorganisation, the investors will get new shares and they will also take over the duties of Blockbuster's board in return for forgiving the debt.
Blockbuster is based in Dallas and has around 25,500 staff members, which includes as many as 7,500 full-time workers.
The bankruptcy has severely affected the shares of the Company and the New York Stock Exchange in the month of July has already delisted Blockbuster Inc.