Blockbuster Paid Restructuring Firm $1.7M for 130 Days of Work29 Apr, 2011 By: Erik Gruenwedel
Working for a video store can be quite lucrative -- depending on your job title.
Blockbuster Inc. paid a consulting firm more than $1.7 million over a four-month period — including more than $555,000 in compensation to a chief restructuring officer — despite failing to restructure its fiscal operations.
After filing for bankruptcy Sept. 23, 2010, Blockbuster retained Alvarez & Marsal North America LLC to assist it through the fiscal reorganization process, according to an April 14 filing with U.S. Bankruptcy Court in New York disclosed April 29.
In addition to retaining A&M executive Jeff Stegenga as CRO, a staff of 14 A&M employees billed Dallas-based Blockbuster for 2,402.4 hours of work at rates ranging from $200 to $675 per hour. Staffers dealt with myriad responsibilities, including accounting, administrative, business plans, claims management, communication, court hearings, contract reviews, analysis and negotiations, among others.
Stegenga was paid $165,000 from Sept. 23 to Oct. 31, and $130,000 per month thereafter, according to the filing. During this period, Blockbuster reported monthly losses approaching $40 million.
Meanwhile, the average Blockbuster store manager nationally makes about $40,000 annually; with store clerks paid $7.81 per hour on average, according to online sources. Shift leaders and assistant store managers earn about $9.22 and $12.04 per hour, respectively.
Separately, A&M billed Blockbuster $63,696 in airfare, lodging, transportation, meals and miscellaneous fees during the 100-day period — despite the fact A&M has offices in Dallas and New York.
Dish Network acquired Blockbuster April 6 for $320 million after the chain put itself for up for auction sale Feb. 21.