According to Dallas Business Journal, video rental giant Blockbuster is once again on the brink of bankruptcy, with their latest financial statement saying cash on hand and cash flow will only give the company 12 months at most.
At that point, the company would not be able to pay off its debts, and Chapter 11 bankruptcy would become "an option."
However, the company said it was just using cautionary language when bringing up the option of Chapter 11 bankruptcy, and that shareholders should not be worried.
At the very least, the company concedes it will need to close more stores as it will not meet the financial goals it hoped for 2010.
"The operating environment continues to be challenging, but we have made significant progress during the past year in reducing costs," adds Jim Keyes, CEO. "We believe we will continue to have adequate liquidity during 2010 through efforts including divesting non-core international assets, significantly improving working capital, continuing to reduce operating costs, and improving credit terms. Since there are execution risks related to these objectives, we are simultaneously pursuing a recapitalization and are in discussions with bond holders and other parties to improve our liquidity."
However, the company said it was just using cautionary language when bringing up the option of Chapter 11 bankruptcy, and that shareholders should not be worried.
At the very least, the company concedes it will need to close more stores as it will not meet the financial goals it hoped for 2010.
"The operating environment continues to be challenging, but we have made significant progress during the past year in reducing costs," adds Jim Keyes, CEO. "We believe we will continue to have adequate liquidity during 2010 through efforts including divesting non-core international assets, significantly improving working capital, continuing to reduce operating costs, and improving credit terms. Since there are execution risks related to these objectives, we are simultaneously pursuing a recapitalization and are in discussions with bond holders and other parties to improve our liquidity."
