Blockbuster (BLOKA.PK) is getting close to filing Chapter 11, the Wall Street Journal reports, possibly before the end of the week. Under an expected reorganization plan, the video retailer would keep a small number of locations, while focusing on digital distribution. Another 500 to 800 stores could close.
The Journal reports that the plan would wipe out all of the company’s debt: $630 million in senior debt would convert into equity; lower-ranking debt would be wiped out; and the current common stock, of course, would be worthless, as well. The story notes that Carl Icahn holds a third of the senior debt, and has led a push to wipe out all of the company’s borrowings.
On Tuesday, the stock closed at 8 cents in trading on the pink sheets.
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