LOS ANGELES — Home-video chain Blockbuster, in bankruptcy, has opted to put itself up for sale after creditors were unable to agree on a recapitalization plan.
The Dallas-based company said Monday it has submitted a plan for an auction process to U.S. Bankruptcy Court in New York. A holding company formed by four of its largest creditors — Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Varde Partners — has submitted an opening “stalking horse” bid of $290 million.
The offer is intended to create a floor for future bids, though if none comes in, the company would end up in the hands of those creditors.
Billionaire corporate raider Carl Icahn, the largest owner of Blockbuster’s debt, is not part of the stalking- horse bid.
In a statement, Blockbuster chief executive Jim Keyes said the company hopes to draw offers from both strategic and financial investors.
“This will . . . allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster’s future,” he said.
By seeking a sale, Blockbuster is hoping to hasten its exit from bankruptcy protection. The company filed for Chapter 11 in September, burdened by a hefty debt load and pressured from rivals such as Netflix and Redbox.
For many companies, and retailers in particular, exiting bankruptcy as quickly as possible is a high priority. While Blockbuster has been operating normally since its Chapter 11 case began, customers often feel skittish about frequenting such retailers.
When Blockbuster filed for Chapter 11, the owners of $630 million of its senior secured bonds said they intended to exchange their debt for full ownership of the company.
That plan appears to have fallen apart in bankruptcy-court proceedings, however, leading to the new sales process.
Earlier this month, The Wall Street Journal reported that Blockbuster planned to put itself up for sale after a disagreement with its creditors.
Blockbuster didn’t address that directly Monday.
Blockbuster used to be the dominant U.S. movie-rental chain. But it lost money for years as customers shifted to Netflix, video on demand and DVD- rental kiosks.
When it filed for bankruptcy protection in September, it was down to 3,000 stores. In December, the chain said it planned to close 182 stores in the next few months.
