Liquidators Among Blockbuster Bidders4 Apr, 2011 By: Erik Gruenwedel
Winning bidder on the hook to home entertainment’s smaller players
Two firms specializing in liquidation of businesses have reportedly combined to enter a bid for bankrupt Blockbuster’s DVD and Blu-ray Disc inventory at more than 1,700 stores.
Blockbuster, which went on the auction block April 4 in Manhattan, N.Y., is expected to fetch at least $290 million — the so-called stalking horse bid offered by a group of debt holders and hedge funds when the retailer announced it was putting itself up for sale.
Liquidators Gordon Brothers and Hilco Merchant Resources combined bids, according to sources familiar with the proceedings, The Wall Street Journal reported. Although considered a long shot, the liquidators would likely shutter most Blockbuster stores and sell the inventory.
Separately, the winning suitor from the auction will be on the hook to pay E1 Entertainment about $1.8 million — one of several “cure amount” expenses the bankrupt disc rental company has agreed to pay select home entertainment distributors for past-due designated contracts.
In bankruptcy proceedings, a “cure amount” is the amount the debtor agrees to pay for past-due contracts — a figure that often is significantly less than the original sum owed.
In a list of non-store lease agreements submitted April 2 to U.S. Bankruptcy Court in New York, Blockbuster cited myriad contracts the new owner(s) would assume following a successful bid. Included in the list were revenue-sharing agreements and digital distribution and video-on-demand deals with Disney Interactive Studios ($638,000), Sonic Solutions ($598,000), Phase 4 Films ($284,000), NCR Corp. ($225,000), distributor Baker & Taylor ($206,000), Magnolia Pictures ($206,000), Maya Releasing ($147,000), Image Entertainment ($106,000), Real Networks ($100,000) and The NPD Group ($64,000).
Notable among this list is Duluth, Ga.-based NCR, which owns and operates nearly 9,000 Blockbuster Express kiosks under a license agreement.
Blockbuster also owes Monterey Media $204.65.