Blockbuster Inc, is the movie rental chain that has indicated that it could go in for a Bankruptcy filing. This is something that the company has said in an SEC (Securities and Exchange Commission) filing that it may have to go in for Bankruptcy filing under the Chapter 1 of the Bankruptcy Act. This is a clear and distinct possibility if the company is unable to meet its cash or liability requirements and if it has to restructure its debt so as to be able to meet the requirements on this count. The company has said that its cash position is quite precarious. This means that from golf courses to piazza and hotel chains to movie rentals, all aspects of the entertainment industry in the US are reeling from the onslaught of the recession. People are spending less as they are earning less and companies like Blockbuster are paying through their nose for this.
The company’s cash position is so bad that its ability to continue as a going concern is a matter of grave concern and deep doubt. It is not able to meet its liquidity needs to continue with its head held high. In addition, the company has been reeling from massive competition from new movie rental companies.