Blockbuster finally files for Chapter 11

Blockbuster has had a rough few years, but this one has been especially painful. First, its shares were delisted from the New York Stock Exchange. And now, as expected, it has filed for Chapter 11 bankruptcy reorganization as it struggles to compete with online video-rental service Netflix and the rental-kiosk phenomena. Calling it "pre-arranged recapitalization," Blockbuster announced today that it has filed Chapter 11 petitions in the U.S. Bankruptcy Court. The reorganization encompasses only the company's U.S.-based operations and stores that it wholly owns. International operations and franchises are not included in the filing, Blockbuster said. However, the reorganization does encompass quite a bit. According to the company, all of its stores, by-mail service, and streaming operation are included in the proceedings. Blockbuster is also planning to take a harder look at its operations. Although its 3,000 stores are still operating normally, Blockbuster said, it plans to "evaluate its U.S. portfolio." If and when it emerges from Chapter 11, Blockbuster expects to be in a better position to compete against Netflix and its other rivals.

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