Blockbuster cleared for sale process, will avoid liquidation
New York City — A Manhattan bankruptcy judge on Thursday has cleared the path for Blockbuster to sell itself to a group of hedge funds, preventing the movie rental chain from having to liquidate its assets.
Judge Burton R. Lifland has approved procedures for the auction of Blockbuster, with a $290 million initial offer from a group of senior bondholders led by hedge fund Monarch Alternative Capital.
"The parties have come to an accord and presented us with a more palatable situation," said Judge Lifland. He has agreed to hold the auction in his courtroom. It is expected to occur in the first week of April.
The Monarch-led group’s proposal could be topped by competing bidders in a bankruptcy court auction. According to reports, at least seven other suitors have expressed interest in Blockbuster.
"Hopefully, there will be an overbid so there will be [more] money available to pay these administrative claims," said Stephen Karotkin of Weil, Gotshal & Manges, a lawyer for Blockbuster, in a report by the The Wall Street Journal.
Blockbuster will use proceeds from the sale to pay movie studios for money owed, and the studios will continue shipping DVDs to Blockbuster stores.
A Chapter 7 liquidation is now off the table.
Online sales tax bill approved by Arkansas Senate
New York City — The Arkansas Senate voted Thursday to require many out-of-state online retailers to collect sales taxes the same way in-state stores do, a move that is pitting Wal-Mart Stores against online stores and anti-tax activists, the Associated Press reported.
The bill would require out-of-state online retailers to collect Arkansas sales taxes if their annual sales in the state exceed $10,000. The measure would apply to retailers that have online affiliates in Arkansas, who directly or indirectly refer customers for a commission or some other consideration.
Under current law, customers are required to pay state sales taxes on items they buy online but the burden is on them to report and pay the taxes to the state.
State officials say the change would have a minimal financial benefit to the state, and said it would depend on the response of online retailers such as Amazon.com. When similar legislation was enacted in Rhode Island and North Carolina, Amazon ended its affiliate program so it could continue selling in the states. A spokesman for Amazon did not respond to a request for comment Thursday.
One of the biggest backers of the proposal is Wal-Mart Stores, which said the legislation would level the playing field between retailers and online businesses, according to the report.
The proposed change faces heavy opposition from the anti-tax group Americans for Tax Reform.
Consumer Sentiment Index falls more than estimated to 68.2
Ann Arbor, Mich. — A report released Friday by Thomson Reuters/University of Michigan showed that confidence among U.S. consumers fell more than forecast in March, precipitated by a surge in fuel prices.
The Thomson Reuters/University of Michigan Consumer Sentiment Index fell to 68.2, the lowest in five months, from 77.5 in February. The gauge was projected to decline to 76.3, according to a Bloomberg News survey. The index of expectations plunged to the lowest level since March 2009.
The nine-point drop in sentiment this month was the biggest since October 2008, the last time average gasoline prices topped $3.50 a gallon.
Estimates for the confidence measure ranged from 74 to 80, according to the Bloomberg survey. While the index averaged 89 in the five years leading up to the recession that began December 2007, it hasn’t reached that level since the recovery started in June 2009.
“Consumers are reacting to the run-up in gas prices, which accelerated in the middle of February,” Ryan Wang, an economist at HSBC Securities USA in New York, told Bloomberg. “It’s taking up a bigger portion of their wallet. If fuel prices rise even further, it could be a threat to consumer spending.”