Former Blockbuster: Wind-down yields $29 million recovery improvement

By Caroline Salls

Pittsburgh, Oct. 18 - BB Liquidating Inc., formerly Blockbuster Inc., said its wind-down efforts have resulted in a $29 million estimated overall recovery improvement for holders of administrative claims, according to a status report filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, the company said it estimated a $110 million recovery on roll-up notes on May 10 but was instead able to repay the $125 million notes claim in full.

In addition, a fund to be shared by holders of valid operating period claims was estimated to hold $3.5 million in May but is estimated as of Oct. 19 to hold $7.5 million.

Blockbuster said a residual recovery to be shared by holders of senior secured notes and unpaid operating period claims is now estimated to be $10 million. There was expected to be no residual recovery under the May estimates.

Post-sale activities

Since the sale closing, the company said its proceeds distribution activities have included the following:

• Reimbursement of expenses in connection with the company's asset sale and auction;

• Repayment in full of the roll-up notes;

• Allocation of $4 million of sale proceeds to an administrative account in addition to the $3.5 million funded before the sale closing;

• Final payment of all post-bankruptcy employee obligations;

• Calculation and settlement of all post-closing tail revenue share and certified field destroy obligations for specified studios;

• Completion of all sales and use tax returns;

• Settlement and payment of all known critical expenses;

• Settlement of final cash and inventory purchase price adjustments, including a release by buyer DISH Network of $19.1 million of the $20 million held in escrow; and

• Transfer to the buyer of all of Blockbuster's not-yet-reported employee health-related claims.

Cash update

As of Sept. 30, BB Liquidating had $44 million of cash on hand, excluding $7.5 million in the administrative account, for the costs of administering the bankruptcy case and for further distributions in accordance with the sale order.

The company said its wind-down efforts are expected to cost an additional $700,000 to $800,000 over a three-month period in excess of a wind-down budget that runs through Nov. 30.

BB Liquidating will provide a wind-down status report to the court on Oct. 19.

Blockbuster, a Dallas-based provider of in-home movies and game entertainment, filed for bankruptcy on Sept. 23, 2010. Its Chapter 11 case number is 10-14997.

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