3:34 AM
BANGALORE | Thu Sep 23, 2010 6:22am EDT
BANGALORE (Reuters) - Video rental chain Blockbuster Inc (BLOKA.PK) filed for bankruptcy as part of a pre-arranged deal with bondholders that would slash the company's debt by about $900 million.
More than 80 percent of the company's senior noteholders have agreed to support the plan and provide $125 million in "debtor-in-possession" (DIP) financing to help support Blockbuster's operations while it is under bankruptcy, the company said in a statement.
"Currently, all 3,000 of the company's stores in the United States will remain open," it said.
Blockbuster said it will no longer provide funding to support its operations in Argentina, which have experienced continued shortfalls in operating cash flow.
In a separate statement, Blockbuster Canada said it was not included in the Chapter 11 filing and all its operations were conducting business as usual.
Earlier this year, the Dallas-based retailer said it would close nearly 10 percent of its stores. Customers have moved away from renting films through its outlets in favor of online services such as Netflix (NFLX.O).
Blockbuster rival Movie Gallery Inc (MVGRQ.PK) filed for bankruptcy in February. Though the operator of the Hollywood Video rental chain initially planned to reorganize, by May it had decided to liquidate entirely.
The case is In re: 10-14997, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Santosh Nadgir and Sakthi Prasad in Bangalore)
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