Blockbuster not filing for bankruptcy

Blockbuster has denied that it is using law firm Kirkland & Ellis to help it file for bankruptcy.

National newspapers reported this morning that the retailer had recruited Kirkland to advise it on ‘bankruptcy or restructuring’.

However, Blockbuster spokeswoman Karen Raskopf has told Bloomberg:

We’ve hired them for refinancing and capital raising initiatives. We do not intend to file for bankruptcy.”

Blockbuster is working with Kirkland and Ellis on refinancing $350 million (249 million) of debt.

Blockbuster has a $350 million revolving credit facility that is due to be repaid in August. The company is attempting to refinance that debt, plus a $28 million term loan.

The company previously announced plans to fund its own operations through the end of 2009 after two of its credit facilities expire this August, she said.

The US chain, which has 700 stores in the UK, has been suspended on the New York Stock Exchange after its shares fell more than 76 per cent last night.