December 23, 2010 / 5:14 PM / 8 years ago

Blockbuster wants control of bankruptcy until March

WILMINGTON, Delaware (Reuters) - Video rental chain Blockbuster Inc wants to have control over its bankruptcy extended to March 21 to develop its business plan, according to court documents.

The largest U.S. video rental chain filed for bankruptcy in September and its exclusive right to propose a reorganization plan to its creditors expires on January 21.

If that right is not extended, any party in the bankruptcy could propose their own plan.

Blockbuster said in documents filed Wednesday in Manhattan’s bankruptcy court it needs more time to assess how many of its roughly 2,900 stores to keep open, which it called the critical element of its business plan.

Analysts have said the company must cut its costs if it hopes to compete with rivals that are not burdened with thousands of stores, such as Netflix Inc and Coinstar Inc’s Redbox kiosks.

Blockbuster filed for bankruptcy with a plan to wipe out most of its roughly $1 billion in debt by turning over control to holders of its secured bonds.

Those bondholders, led by billionaire investor Carl Icahn, also provided the company funding to continue operating in bankruptcy.

Blockbuster told Reuters earlier this week it had to extend the deadline because of the complex work evaluating thousands of stores’ leases in the midst of the holiday shopping season.

While bankruptcy courts routinely grant extensions of exclusivity, they can become grounds for unveiling a competing offer for a company.

A group of shareholders said on Wednesday they are working with potential investors who are considering an offer for Blockbuster that would challenge the plans of Ichan’s group.

Shares of Blockbuster were up 12.3 percent at 14.6 cents in pink sheet trading.

The case is In re: 10-14997, U.S. Bankruptcy Court, Southern District of New York.

Reporting by Tom Hals, editing by Dave Zimmerman

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