New York City A Reuters report on Tuesday revealed that Blockbuster Inc. has hired lawyers to explore a possible bankruptcy filing, according to a source familiar with the matter.
The company's shares were halted by the New York Stock Exchange for news dissemination, triggering a suspension in share trading.
Shares of the debt-laden firm plummeted more than 76% in the morning before their suspension, while shares of online archrival Netflix jumped more than 13%.
Blockbuster, which has been scrambling to cope with the increasing popularity of online video, has appointed law firm Kirkland & Ellis LLP to evaluate its restructuring options, including a possible bankruptcy, the source said. Blockbuster is also working with turnaround specialists at investment banking firm Rothschild, according to the source.
There has been no comment from Blockbuster directly.
Executives had said in November that the firm would face challenges refinancing its debt.
A Tuesday report on Bloomberg’s Web site stated that Kirkland & Ellis LLP was asked to evaluate restructuring options for the movie rental company, which may include a "pre-packaged" or "pre-arranged bankruptcy."