Judge Burton R. Lifland, who just days earlier had compared the chances of a proposed sale going through to a garbage truck’s potential to fly, cleared the way for a sale of the troubled Blockbuster video rental giant to a group of senior bondholders led by the hedge fund Monarch Alternative Capital/Cobalt Video. The judge made his determination after lawyers for the Hollywood studios who had objected strongly to the sale (see “Blockbuster Sale Under Attack,” and “More Objections to Blockbuster Sale”) were mollified by last minute agreements that will funnel more of the proceeds from the sale of Blockbuster to pay the company’s debts to the studios.

 

According to the Wall St. Journal, at least seven other suitors are interested in Blockbuster and the Monarch group’s $290 million bid could be topped by competing bids in a bankruptcy auction. A provision in the sale that would have allowed Monarch to convert Blockbuster’s Chapter 11 bankruptcy into a Chapter 7 liquidation has been stripped out.

 

Although negotiations between lawyers for the studio and Monarch/Cobalt included some very public shouting matches, a deal was eventually reached that satisfied the studios. Summit Entertainment has withdrawn its motion in favor of a Chapter 7 liquidation, and the studios have agreed to keep on shipping DVDs to Blockbuster stores.