Updated: US film and games rental chain Blockbuster has filed for bankruptcy protection as it strives to cut its debts and ensure the survival of the business.
Agreements with its creditors will allow it to cut its debts from nearly $1bn to about $100m
Blockbuster’s UK arm is a separate entity and will not be included in the bankruptcy.
Blockbuster chief executive Jim Keyes said: “The process announced today provides the optimal path for recapitalising our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers.”
The retailer has 5,500 stores in the US and Europe, including around 600 in the UK.
It is expected to accelerate a store closure programme across the embattled US arm.
The profitable UK arm has previously stressed that if the parent filed for bankruptcy it would have no operational affect on the UK business, although Blockbuster UK’s managing director Martin Higgins told Retail Week that there could be some affect on its ability to buy plentiful stock in the run up to Christmas.
In the first six months of 2010, losses soared from $9.2m to $134m at the US parent.
The retailer has struggled in the face of digitalisation and the rise of operations such as Lovefilm, which Amazon is thought to be interested in aquiring.