Blockbuster Files for Bankruptcy

Troubled video-rental chain Blockbuster filed for Chapter 11 protection today, saying it plans to keep stores and kiosks open as it reorganizes. In a submission to the US Bankruptcy Court, the company said it reached an agreement with bondholders on a recapitalization plan.

Blockbuster plans to reduce debt from nearly $1 billion to about $100 million or less by swapping debt for equity. It has received commitments for $125 million in "debtor-in-possession" financing from senior noteholders to repay customers, suppliers, and employees during the reorganization. Blockbuster CEO Jim Keyes said the move would allow Blockbuster to "transform our business model to meet the evolving preferences of our customers." (More Blockbuster stories.)