Blockbuster finally says the B-word…

For the past few years, there’s been bankruptcy chatter about Blockbuster (BLOKA). Indeed, at times the speculation has been so rampant that company executives have had to actually issues statements to the media (see this story from last year and this interview with CEO Jim Keyes from this past June) that the company was not planning to file for bankruptcy. Here’s a snip from the June interview with Keyes in Fast Company:

So Blockbuster is not going to file for bankruptcy protection?
As I’ve said, we’re looking at all of the various options to refinance and recapitalize the company. I’ve said repeatedly that the company’s objective is to seek out-of-court solutions with strategic investors to recapitalize, and we’ve been exploring a number of those alternatives.

Well, in perhaps the most anti-climatic moment in the history of the movies, Blockbuster changed its tune on Friday. In both the press release and 10-Q that were filed on Friday, Blockbuster talked about bankruptcy as a distinct possibility.

Of course, the disclosure was buried. In the 8-K it was smack-dab in the middle of the endless “forward-looking statements” — a section that even the sleuths here at footnoted tend to gloss over. Here’s how they described it:

whether, even despite the successful implementation of one or more of the recapitalization initiatives we are currently pursuing, we will be forced to file for protection under Chapter 11 of the U.S. Bankruptcy Code, which could materially adversely affect our relationships with existing and potential customers, employees, suppliers partners and others and could result in very little recovery to our existing security holders;

And here’s the disclosure from the 10-Q filed that same day:

It is possible that even a successful and efficient implementation of the recapitalization initiatives we are pursuing will require us to make a filing for protection under Chapter 11 of the U.S. Bankruptcy Code.

As we’ve footnoted in the past, Blockbuster has always been a bit of a drama queen, as far as companies go. But this latest disclosure seems likely to elicit lots of snores.

Image source: Blockbuster


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