Blockbuster back in administration

Blockbuster back in administration

Struggling DVD rental chain Blockbuster faces being broken up by Christmas after it formally went into administration today – for the second time this year.

Corporate recovery specialists, who have now taken charge of its future, say parts of the business have attracted the interest of potential buyers – though some are only eyeing up store sites to be taken over as Morrisons did earlier this year.

Blockbuster announced two weeks ago that it intended to go into administration, putting jobs at risk.

In a statement today, it said: “In the last fortnight, efforts have been focused on finding a buyer to give the company a chance of future survival. Regrettably, no buyer has yet been secured for the business.”

Now, it has formally appointed Simon Thomas and Nick O’Reilly of Moorfields Corporate Recovery as administrators.

Mr Thomas said: “We are pleased to say that there are parties who are interested in parts of the business. Our focus will be secure a future for as much of the business as possible as well as trying to save jobs before Christmas.”

Rents have been paid on many stores only until around Christmas Day meaning that any commitment to stay open beyond that period looks unlikely without a deal.

Blockbuster, which has 264 stores in the UK, has been hit hard by competition from supermarkets as well as the rise of streaming services and online movie rentals.

It went into administration in January, before being bought by private equity group Gordon Brothers Europe in March.

At the time of its initial collapse, it had 528 stores in the UK employing 4,190 staff – numbers that have since halved.

Announcing the intention to go into administration again at the end of last month, Gordon Brothers said its turnaround attempts had coincided with a patch of poor trading across rental and retail sales.

It said its efforts had included restructuring, investing in marketing and negotiating new deals with landlords. But it failed to broker a licensing deal with US company Blockbuster LCC, which owns the brand, for a new digital platform.

Gordon Brothers chief executive Frank Morton said the firm had “worked tirelessly to turn around Blockbuster UK with a raft of strategies and investments”.

Moorfields said: “Whilst the company is in administration, every effort will be made to ensure retail trade continues as normal. We encourage customers to visit stores and continue to rent and buy as usual.”

Supermarket chain Morrisons bought 49 of Blockbuster’s former stores in February under plans to expand its convenience store network.

Last week, the axe fell on 300 US Blockbuster stores leaving the once-dominant chain with just 50 franchised shops remaining open in the country.

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