Blockbuster has hired lawyers to advise on restructuring its US$350m of debt.

The US video rental chain has brought in restructuring firm Kirkland & Ellis to advise it on debt refinancing and capital raising after being hit by online competitors.

Blockbuster, the world’s biggest film-rental business, insisted that it will not file for bankruptcy protection after trading in its shares was stopped for 90 minutes yesterday afternoon in New York.

Blockbuster has a US$350m revolving credit facility due to be paid back in August. It wants to refinance that debt and a US$28m term loan.

A Blockbuster spokeswoman insisted that even without refinancing it had enough cash to carry on till the end of the year.