Blockbuster Inc, the world’s largest movie-rental chain, hired the law firm Kirkland & Ellis LLP to explore a possible bankruptcy filing, a person familiar with the situation said.
Blockbuster stock on Wall Street fell as much as 86 percent yesterday before trading was halted.
The law firm was asked to evaluate restructuring options for the company, which may include a “pre-packaged” or “pre-arranged bankruptcy,” in which much of the restructuring work is completed out of court, the person said.
A pre-packaged filing is more advanced than a pre-arranged bankruptcy, as it includes agreements from creditors about the outcome of the company’s reorganization.
“We’ve hired them for refinancing and capital raising initiatives,” said Karen Raskopf, a Blockbuster spokeswoman.
“We do not intend to file for bankruptcy,” she said.
Blockbuster is working with Kirkland and Ellis on refinancing, Raskopf said. The company previously announced plans to fund its own operations through the end of this year after two of its credit facilities expire this August, she said.
Blockbuster has also hired Rothschild Inc, an investment bank, to advise it on restructuring, a person familiar with the situation said.
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