The $290 million stalking horse bid for the beleaguered video rental chain Blockbuster came under more fire as Lyme Regis Partners, which holds 9% of Blockbuster’s senior secured debt, filed a motion asking the court to appoint a trustee to oversee the iconic rental chain’s reorganization.

 

Home Media reports that in its filing Lyme indicated that Blockbuster should probably be sold at some point in the course of a reorganization, but that the reorganization should be carried out with the interests of “the entire creditor body, rather than conferring an advantage on one specific buyer such as Cobalt.”

 

Cobalt Video holds more than half of Blockbuster’s $630 million in secured debt, and has not said whether, if its bid were accepted, it would continue to operate the troubled chain or liquidate it. Judge Burton Lifland, who is slated to hear various motions concerning the Cobalt bid later this week, does not seem overly impressed. The judge was quoted by the Street.com commenting on the Cobalt bid, “If anything is going to fly, this garbage truck better sprout wings.”

 

A number of unsecured creditors including several major studios is pushing for the liquidation of Blockbuster (see “Blockbuster Sale Under Attack”). In a situation analogous to a group of publisher demanding the return of inventory from Borders (see “Publishers to Borders, We Want Our Books Back”), Warner Home Video, Sony Pictures Entertainment, and Lionsgate have all filed motions seeking the return of unsold product from Blockbuster, following in the footsteps of Universal, Fox, and Summit Entertainment, which filed similar motions nearly two weeks ago (see “Studios Ask Blockbuster for Returns”).