Bankrupt movie rental chain Blockbuster is being auctioned off today. Multiple bidders will fight for the rights to the company's next owner as well as the amount of money available to pay off its claims. The auction could preserve Dallas-based Blockbuster as an ongoing business, although bidders also have the option of liquidating the company, or closing it.
Satellite television company Dish Network and billionaire investor Carl Icahn qualified for the auction by submitting bids last week, according to people familiar with the matter cited by The Wall Street Journal. Another possibility is South Korea's SK Telecom, which we reported on last week.
Bids for the movie-rental chain were due Thursday evening, and potential suitors have been considering whether to take on a group of hedge funds led by Monarch Alternative Capital that already offered to buy Blockbuster for about $290 million. A hearing before bankruptcy Judge Burton Lifland will take place on April 7 to approve the new owner.
Blockbuster was once the world's largest video chain with a market cap of more than $5 billion at its peak in 2002. It started to fall apart after pressure from mail-order and digital competitors such as Netflix.
In September 2010, Blockbuster filed for Chapter 11 bankruptcy protection in the US. Two months ago, Blockbuster asked the New York bankruptcy court overseeing its Chapter 11 case to allow it to conduct an auction for the company. The company decided to put itself up for sale (and is hoping a transaction will take place by April 20) after a reorganization plan fell apart late last year.