Blockbuster (NYSE: BBI), which had warned for months that it might have to declare bankruptcy, is expected to file for Chapter 11 later this week or next, the WSJ says. The paper says that Blockbuster will likely close 500 to 800 stores. That’s in addition to of the 960 stores Blockbuster announced it would close a year ago as part of what it called a “transformation” of its business. As of July 4, it had 3,425 stores in the U.S., down from 4,356 a year ago.
The store closings will likely hasten the transition to alternate video rental models, and, indeed, Netflix (NSDQ: NFLX) stock is up 5.8 percent today to $155.74. Blockbuster, by contrast, is down 23.75 percent to $0.06 a share.
Blockbuster apparently still believes there’s a market for a much-smaller bricks-and-mortar chain, although the WSJ says the restructured company will also emphasize “digital distribution.” The company has an on-demand streaming service that it said it would expand last year, although it has had nowhere near Netflix’s success.
The WSJ says the bankruptcy filing will leave the company without any debt. It will also give investor Carl Icahn, who sold a substantial percentage of his stock holdings in the company earlier this year but still owns a third of the company’s senior debt, a bigger role, including a board seat.
We’ve reached out to Blockbuster for comment and will update when we hear back.