Former Blockbuster converts Chapter 11 bankruptcy cases to Chapter 7

By Lisa Kerner

Charlotte, N.C., July 16 - BB Liquidating Inc., formerly Blockbuster Inc., had its cases converted to Chapter 7 from Chapter 11 by the U.S. Bankruptcy Court for the Southern District of New York on Tuesday, according to a court filing.

As previously reported, BB Liquidating said conversion of the Chapter 11 cases will provide a mechanism to reconcile any remaining claims, make final distributions and close the administration of the cases.

The company said it is still receiving administrative payment requests, tax delinquency notices, various litigation-related documents and employment verification requests.

According to the filing, a Chapter 7 trustee will be appointed.

Upon conversion, the trustee will determine how to allocate estate assets to respond to requests from taxing authorities and other entities.

BB Liquidating, in an earlier motion, said it had $1.06 million of cash on hand as of May 15, of which about $720,000 is estimated to be used to pay unpaid administrative and secured claims, leaving roughly $340,000 for the costs of administering the Chapter 7 cases upon conversion and for any additional distributions to creditors.

The company said it also estimates that about $160,000 held in reserve for the liquidation of disputed operating period claims will be transferred to BB Liquidating.

Blockbuster was a Dallas-based provider of in-home movies and game entertainment. It filed for bankruptcy on Sept. 23, 2010 under Chapter 11 case number 10-14997.

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