Blockbuster Files for Bankruptcy After Racking Up $1 Billion in Debt

Blockbuster filed for Chapter 11 bankruptcy early Thursday morning in the U.S. Bankruptcy Court for the Southern District of New York. The move is part of the movie rental company’s effort to reduce its debt.

To complete its spinoff from Viacom in 2004, Blockbuster had to pay Viacom shareholders $5 per share which amounted to approximately $1 billion in debt for Blockbuster. The company is looking to reduce that debt to $100 million or less.

Blockbuster says its U.S. stores will remain open during bankruptcy proceedings because they received $125 million in financing from senior bondholders. The company shut down about 1,500 of its stores last year and now operates around 3,000 locations across the country.

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