LOS ANGELES (Reuters) - Movie rental company Blockbuster Inc on Wednesday won court approval for $125 million in financing to keep operating while in bankruptcy, and to pay claims made by film studios.
The financing authorized by U.S. Bankruptcy Judge Burton Lifland will allow the nation’s largest video renter to continue paying employees and stocking its shelves with games and DVDs while it restructures.
Lifland gave Blockbuster authority to pay prepetition claims of Hollywood studios and game providers, so that it can keep its inventory current.
He also approved the retention of Jeffery Stegenga, from the restructuring firm Alvarez & Marsal LLC, as chief restructuring officer, and the law firm Weil Gotshal & Manges LLP as bankruptcy counsel.
Blockbuster filed for bankruptcy protection last month after being battered by online and mail-order services such as Netflix Inc and low cost physical disc rental competitors such as Coinstar Inc’s Redbox.
The company has shuttered thousands of stores in the past few years, and now operates just under 3,000.
Blockbuster last month agreed with senior noteholders on a plan to recapitalize its balance sheet and cut debt to roughly $100 million or less from $1 billion.
It is still looking for a chief executive to replace Jim Keyes by the end of the year.
The restructuring agreement requires Blockbuster to find a successor acceptable to billionaire Carl Icahn, who is a major bondholder, and his partners.
In Wednesday trading, Blockbuster shares fell two-tenths of a cent to 4.5 cents on the Pink Sheets.
The cased is In re: Blockbuster Inc, U.S. Bankruptcy Court, Southern District of New York, No. 10-14997.
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