WSJ: So Much For Blockbuster's Hopes of Reorganizing Under Ch. 11. It's For Sale.

Back in September, beleaguered Blockbuster finally made it official: The downtown Dallas-based company was bankrupt. Hence, the voluntary, "prepackaged" Chapter 11 filing, which the company insisted would "substantially reduce" the amount of debt it owed -- from $1.46 billion to around $125 million. Ever since then, the thing's been tied up in court, with extension after extension granted while Jim Keyes and Co. tried to find the funds to recapitalize.

So much for that: The Wall Street Journal is now reporting that Carl Icahn and good ol' Monarch Alternative Capital LP -- the very same creditors to whom Tom Hicks owed all those hundreds of millions, throwing the Texas Rangers into bankruptcy -- are this close to just buying the video rentalist for $300 mil, perhaps as soon as next week, and remaking it in their own image. From the story:

Another factor driving momentum toward Blockbuster's looming sale: Bondholders fear the company's value is eroding in bankruptcy court, which the chain entered in September. Without clear ownership or direction, Blockbuster remains hindered in efforts to compete with Netflix Inc. and other rivals, the people familiar with the matter said.

An auction would move faster than a typical reorganization, allowing Blockbuster to be in the hands of new owners sooner who have clear views on what to do with the company, these people said. Blockbuster needs "to get on with it," one of these people said.

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