10-K Watch: Blockbuster Warns Of Crushing Debt Problems; Chapter 11 Filing Remains A ‘Possibility’

A few weeks after reporting that its net loss grew in Q4, Blockbuster’s 10-k presents some stark details about its debt struggles. The movie rental chain’s SEC filing served as a warning of sorts, with Blockbuster (NYSE: BBI) saying that its roughly $1 billion in debt could become more difficult to pay down. As a result, Blockbuster may consider diverting more cash flow from operations to debt service payments. The company added it was pursuing an exchange of all or part of its senior subordinated notes for Class A common stock — something that could force it to seek Chapter 11 bankruptcy protection.

In the interim, the company is currently looking into selling off its international operations as way to ease the heavy debt burden.

Blockbuster is also remaining cautious in terms of pursuing the rental download model and video-on-demand. It has already closed several hundred retail outlets, while at the same time, it