What would have the model said here: "BlowOut Entertainment Files for Bankruptcy Protection (?)
BlowOut Entertainment Files for Bankruptcy Protection (Update1)
(Adds details on Movie Gallery Inc. in third paragraph and
adds to tour.)
Wilmington, Delaware, March 22 (Bloomberg) -- BlowOut
Entertainment, which operates videocassette rental kiosks in
retail chains, filed for bankruptcy court protection from
creditors in the wake of a cash crunch and mounting debt, company
officials said.
The Portland, Oregon-based company listed $18.4 million in
assets and $17.2 million in debts in its Chapter 11 petition
filed in U.S. Bankruptcy Court in Wilmington, Delaware. It
operates 100 kiosks under the BlowOut Video name in Wal-Mart
Stores Inc. locations, Kmart Corp. outlets, and grocery stores.
BlowOut executives said they've agreed to sell the chain to
MGA Inc., whose 900-store Movie Gallery Inc. chain rents videos.
BlowOut will be sold for $2.4 million to pay off lenders and
other secured creditors in the bankruptcy, they said.
''Based upon preliminary indications, the company believes
there will be no assets remaining for distribution to
stockholders following the sale and payment to creditors,''
company officials said in an statement.
Spun off from videocassette distributor Rentrak Corp. in
1996, BlowOut had a tough time competing in the video rental
market, experts said. The company reported a string of losses
between 1996 and 1998 and defaulted on several loans. It warned
in a 1998 filing with the U.S. Securities & Exchange Commission
that it was facing ''severe financial difficulties.''
A cash shortage ultimately forced the company to sell its
assets to Dothan, Alabama-based Movie Gallery and file for
bankruptcy, officials said in the statement. Movie Gallery is the
U.S.'s third-largest video rental chain behind Viacom Inc.'s
Blockbuster Video and Hollywood Entertainment Corp.'s Hollywood
Video.
Among the largest unsecured creditors listed in the
bankruptcy filing is Bentonville, Arkansas-based Wal-Mart's
leasing unit, which is owed $1.3 million, Rentrak, owed $1.1
million and Seagram Co.'s Universal/MCA studio, owed $196,286.
Seagram's is based in Montreal.
BlowOut's shares closed unchanged at 1/8 while Rentrak's
fell 5/32 to 3 1/4." |
