* "Twilight" studio demanding payment
* Blockbuster told studio it has no money
(Adds comment from Blockbuster in paragraphs 3-4, share prices
in paragraph 14)
By Tom Hals
WILMINGTON, Del., Feb 4 The independent studio
behind the hit "Twilight" films wants a judge to force bankrupt
movie rental chain Blockbuster Inc to pay its bills or force it
to into liquidation, according to court documents.
Blockbuster BLOAQ.PK told Summit Distribution LLC that it
would not pay $6.8 million it owed for DVDs shipped since it
filed for Chapter 11 bankruptcy in September because it did not
have the money, according to documents filed with a U.S.
bankruptcy court in Manhattan on Thursday.
Blockbuster said in a statement it was reviewing Summit's
"We continue to work diligently with the studios, our
lender group and other key parties to achieve an outcome in the
recapitalization process that is in the best interest of the
company's stakeholders, including customers, vendors and
employees," Blockbuster said.
Bankruptcy gives companies breathing space to reorganize
their debts in part by ensuring suppliers will be among the
If the company were to be forced into a Chapter 7
liquidation, a trustee would likely replace the management and
Blockbuster could be forced to sell or close all of its
operations to pay off its debts.
Blockbuster representatives spoke with Summit's management
on a Jan. 28 conference call about unpaid bills for DVDs
including the "The Twilight Saga: Eclipse," which was Summit's
second-most popular DVD and No. 4 among all studios last year.
"To Summit's surprise and dismay, the debtors informed
Summit that the debtors would not pay Summit with respect to
products that were shipped post-petition (after the bankruptcy
filing) because the debtors lacked the funds to do so," said a
Summit's president, Stephen Nickerson, said in a court
document that Blockbuster will take in $8.3 million alone from
the "Eclipse" DVD and he called the unpaid bills a "significant
hardship" for the small studio.
Blockbuster filed for bankruptcy in September, weighed down
by its debts and stung by video-on-demand and competitors such
as mail-order pioneer Netflix Inc (NFLX.O) and Redbox Inc, a
Coinstar Inc (CSTR.O) unit that rents movies through kiosks.
Blockbuster, the largest video rental chain, has been
working on a business plan that includes closing many of its
nearly 3,000 U.S. stores and developing its online, mail and
kiosk business. The plan would put billionaire Carl Icahn, once
a significant shareholder, in control of the company.
Blockbuster obtained a $125 million loan from Icahn and a
group of hedge funds to provide money to keep operations afloat
during its Chapter 11.
The company faces a Friday deadline imposed by the Icahn
group for its business plan, although the deadline could be
Shares of Blockbuster were down about 3 percent in late
pink sheet trading at 10.2 cents.
The case is In re: 10-14997, U.S. Bankruptcy Court,
Southern District of New York.
(Reporting by Tom Hals; Editing by Steve Orlofsky, Bernard