Blockbuster Shareholder Group Seeks to Replace Board14 Jan, 2011 By: Erik Gruenwedel
A group of more than 300 individual Blockbuster Inc. shareholders has filed a motion seeking to hold a meeting to replace the Dallas-based disc rental company’s current board of directors.
The group, which claims to represent more than 69 million shares of common A and B stock in the pre-bankruptcy Blockbuster, wants to hold the meeting before a reorganization plan is filed by current debt holders, according to the motion filed Jan. 11 with U.S. Bankruptcy Court in the Southern District of New York.
The filing, which represents a resounding “vote of no confidence,” according to shareholder Jasbir Sandhu, who filed the motion, seeks to replace board members Gary Fernandes, Rod McDonald, VP, secretary and general counsel; CFO Dennis McGill and CEO James Keyes.
In the filing Sandhu said the current board failed to properly recognize and act upon Blockbuster’s core strengths — smaller stores, by-mail subscription, Blockbuster Express kiosks, Blockbuster On Demand — prior to filing for Chapter 11 protection last September.
“Prior to bankruptcy, Blockbuster had turned down the request for a shareholder meeting for re-voting on the “class conversion & reverse [stock] split” measures required to maintain the NYSE listing,” said the motion. “Shareholders believe that the board had demonstrated incompetency in managing the company and estate.”
Sandhu is no stranger to court filings. Last October, he filed a motion alleging Keyes and investor Carl Icahn conspired prior to the bankruptcy filing to manipulate the outcome and enrich key stakeholders.
Keyes’ tenure as CEO and chairman of the board would appear a non-issue considering Blockbuster was granted funds in October to hire an executive search firm for a new CEO.