Blockbuster Bankruptcy – Option the RE

In the Blockbuster bankruptcy saga, the company formerly known as BBI has been shedding top staff in an effort to shift focus from an operator to a fighter fighting for its life. While shedding staff does reduce costs, shedding staff won’t bring money back in so rather than focusing on staff, how about a focus on Real Estate?

The real estate controlled by Blockbuster is indeed impressive. Blockbuster controls the corners of several major shopping centers and pays significantly less than individual operators would for the same space. But no one wants to manage a sublease setup….

So why not sell the options on the leases to assume the lease in full?

This would be an immediate source of cash and could require less negotiation and management than breaking the leases. The options market would allow BBI to generate immediate cash and would allow local businesses the opportunity to get spaces otherwise held off market by the landlords and their leasing companies.

Of course, those leases may be the only value left in Blockbuster, which could cause creditors to go crazy – the wrong kind.

If by selling off a few locations, Blockbuster can save a few choice stores/locations, generate some cash for capex and retool, then the current creditors will allow the transactions.

Action Item: List Blockbuster properties on eBay.