Blockbuster said prepping for sale (WSJ, NYP)

By Nancy Tartaglione

According to reports in The Wall Street Journal and The New York Post, Blockbuster is preparing to put itself up for sale. The move come after creditors disagreed on plans to pony up more cash to help the ailing chain exit bankruptcy protection.

Rather than a reorganization in bankruptcy court, Blockbuster will now seek buyers and could ask a judge to approve bidding procedures as early as next week, The Journal said citing people familiar with the matter.

Per Journal sources, Carl Icahn and a consortium led by hedge fund Monarch Alternative Capital are the leading contenders to acquire Blockbuster. Along with assumption of various liabilities, offers could come in at more than $300 million.

WSJ:

An auction would move faster than a typical reorganization, allowing Blockbuster to be in the hands of new owners sooner who have clear views on what to do with the company, these people said. Blockbuster needs "to get on with it," one of these people said.

WSJ:

Any new owner will have to speed Blockbuster's transition away from brick-and-mortar stores and toward more modern businesses, such as vending-machine kiosks, mail-order deliveries and on-demand services through cable boxes and the Internet.

"The difficulty is that the future of 'brick-and-mortar' [stores] looks very iffy in the video-rental space," one person close to the process told The Post.

"Rome is burning and they have to come up with a solution fast," another source told The Post.