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Blockbuster creditor eyes immediate claim payment, case conversion
By Caroline Salls
Pittsburgh, Feb. 24 - Blockbuster Inc. creditor Summit Distribution, LLC has asked the U.S. Bankruptcy Court for the Southern District of New York to either order the company to immediately pay its administrative expense claim or convert Blockbuster's Chapter 11 case to Chapter 7 for liquidation.
Independent production and distribution studio Summit said it shipped its second largest title of the year, "The Twilight Saga: Eclipse," and several other titles to Blockbuster on 60-day credit terms.
Summit said Blockbuster failed to make the first payment on the "Eclipse" shipment and told the distributor that it would not pay for products that were shipped after Blockbuster filed for bankruptcy because it lacked the funds to do so.
As a result, Summit said Blockbuster owes $6.79 million for past-due post-bankruptcy receivables and $9.51 million total.
Summit said it is unfair for Blockbuster to be allowed to breach its undisputed post-bankruptcy obligations to one creditor, "while picking and choosing to pay other administrative creditors in full and continuing to increase the administrative insolvency of these cases."
Summit said Blockbuster should either be ordered to pay its obligations in full or the distributor should be granted relief from the automatic stay imposed by the bankruptcy filing to allow it to reclaim its goods.
In addition, Summit said the Chapter 11 case should be converted so a trustee can ensure all creditors are treated fairly.
A hearing is scheduled for March 2.
Blockbuster, a Dallas-based provider of in-home movies and game entertainment, filed for bankruptcy on Sept. 23. Its Chapter 11 case number is 10-14997.
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