Blockbuster Facing Chapter 11Blockbuster’s CEO Jim Keyes has unsuccessfully tried to stem investor fears that the video rental behemoth is gearing up for an inevitable Chapter 11 bankruptcy filing.  But while he insists that Blockbuster has access to several alternatives to bankruptcy, the struggling company has failed to renegotiate $930 million in debt and has watched its cash position reduce from $188.7 million in January to $109.9 million in April.  In its struggle to improve its cash position the company is trying hard to sale its overseas properties; but if it fails it could take one more step closer to Chapter 11 bankruptcy.  Blockbuster is already in talks with investors in an effort to secure $100 million to $150 million for their Chapter 11 bankruptcy debtor-in-possession financing.  This financing will be necessary if the company plans to continue its operations while making its way through the Chapter 11 bankruptcy process.

“As far back as a year and a half ago, we’ve said we’ve been looking at all alternatives,” Keyes said in an interview. “Our objective is to satisfy all our stakeholders in an out-of-court settlement.”

Blockbuster is also negotiating with equity and strategic investors to find a way to recapitalize its balance sheet “as quickly as possible,” Keyes said. But there’s no absolute deadline, he noted, other than being “anxious to resume our focus on transforming the company.”

But the threats of Chapter 11 bankruptcy has sent Blockbuster’s shares to an all-time low and many current stakeholders fear that they may recoup little or even nothing if the company moves into bankruptcy.