Judge Says Blockbuster Can Borrow $45M On Bankruptcy Loan

Judge Says Blockbuster Can Borrow $45M On Bankruptcy Loan
Monday 09/27/2010 11:26 AM ET - Dow Jones News

Related Companies
Symbol Last %Chg
BLOAQ 0.052 -7.14%
BLOBQ 0.0299 -9.39%

As of 1:31 PM ET 10/1/10

By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW

NEW YORK (Dow Jones)--A judge on Monday said Blockbuster Inc. (BLOKA, BLOKB) could tap up to $45 million of the $125 million bankruptcy financing the video-rental company has in place to fund its Chapter 11 restructuring.
Judge Burton R. Lifland of the U.S. Bankruptcy Court in Manhattan signed off on the financing Monday after on Thursday allowing Blockbuster to tap up to $20 million of the debtor-in-possession loan from its senior noteholders to get through the weekend. He wanted Blockbuster to satisfy minor objections to the financing and to give creditors time to review the request before approving the $45 million interim amount.
"I think you've met your burden," Lifland said. He'll decide at an Oct. 19 hearing whether Blockbuster can tap the rest of the loan.
The proceeding was a continuation of Blockbuster's first-day hearing held last Thursday, the same day Blockbuster filed for Chapter 11 bankruptcy protection after reaching a deal on a restructuring plan with its senior noteholders. Under the proposed restructuring, the senior noteholders owed $630 million would swap their debt for stock in the reorganized Blockbuster. Shareholders and junior noteholders owed about $300 million would be wiped out.
Lifland on Monday also authorized Blockbuster to keep paying the movie studios and vendors that allow the company to sell and rent out movies and video games to its customers.
A Blockbuster lawyer read testimony from Blockbuster Chairman and Chief Executive Jim Keyes, who said not paying the studios would result in a "complete derailing of Blockbuster's reorganization efforts."
Blockbuster says the bankruptcy restructuring will allow it to slash its debt to around $100 million from nearly $1 billion. The company hopes to exit Chapter 11 protection by the first quarter of 2011, Keyes said in an interview last Thursday.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Daily Bankruptcy Review; 212-416-2152; joseph.checkler@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/nae/al?rnd=QNuS73vTbwGle8%2BC70zpfA%3D%3D. You can use this link on the day this article is published and the following day.


(END) Dow Jones Newswires
09-27-10 1126ET
Copyright (c) 2010 Dow Jones & Company, Inc.