Studios: Bankruptcy sale favors others
Disney and Universal studios are among the creditors objecting to a bankruptcy sale of vidstore chain Blockbuster Entertainment, charging that it would favor a select group of creditors to the detriment of others.
Specifically, creditors said in filings made Monday and Tuesday that a sale would stand to benefit secured creditors who include billionaire activist Carl Icahn and hedge fund Monarch Capital.
After a bankruptcy organization plan could not be agreed upon, an auction sale was proposed last week, with Monarch offering an initial bid of $290 million to serve as a floor for future bidding.
The retail chain, which still operates about 3,000 stores and has faced fierce competition in recent years from the likes of Netflix, Amazon and kiosk retailer Redbox, went into Chapter 11 in September.
In its filing, Disney said it is owed $9.2 million for DVDs it has shipped to Blockbuster since September. The secured creditors “have now terminated the (credit) facility and are commandeering the Chapter 11 case to help themselves while leaving the estates and administrative creditors uncompensated,” Disney said in its filing.
Other creditors objecting include Yahoo, the U.S. Trustee’s office and various landlords.
Previously, other studios have said they are owed millions by Blockbuster.
U.S. Bankruptcy Judge Burton Lifland in New York is expected to consider on Wednesday the motion to sell the chain to Monarch. It was not clear whether Icahn intends to partner with Monarch.
Icahn waged a proxy fight at Blockbuster in 2005 that gave him a board seat. He relinquished it in January 2010 in a move that led some to believe he was done with the company. After unloading his 17% equity position in the chain last year, however, Icahn began gobbling up what would eventually be about a third of Blockbuster’s debt.