Once the nation's dominant movie rental company, Blockbuster filed for bankruptcy protection Thursday, reeling from mounting losses and competitors that better catered to Americans' changing media habits.
For now, the company will continue to operate its 3,000 U.S. stores, although hundreds are expected to close under new owners, led by billionaire New York investor Carl Icahn.
The move, long expected, marks the end of an era that Blockbuster and its gold-and-blue torn ticket logo helped establish - of Americans visiting video-store chains for the latest movie rental releases.
Increasingly, Americans are watching movies via video subscription services like Netflix, video on demand provided by their cable company or vending machine services such as Coinstar's Redbox.
In its bankruptcy filing in Manhattan, Blockbuster said it reached an agreement with bondholders like Icahn, who holds one-third of Blockbuster's highest-priority debt.
Under the plan, bondholders will exchange nearly $1 billion in bonds for stock in a reorganized Blockbuster. The company has received commitments for $125 million in financing from senior noteholders to repay customers, suppliers and employees during the reorganization.
"After a careful and thorough analysis, we determined that the process announced today provides the optimal path for . . . positioning Blockbuster for the future," CEO Jim Keyes said.
Earlier this year, Blockbuster said it would close hundreds of stores. It had warned investors it might file for bankruptcy protection and its stock was delisted in July.
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