When big businesses file for bankruptcy, there is a ripple effect that occurs. Not only do the shareholders and suppliers suffer, as well as any lenders who are owed outstanding debts, but the company’s employees take a tough hit to their job security, pocketbooks and overall confidence in having to find a decent job in a down economy. This may be the case for Blockbuster employees in both its Dallas and McKinney, Texas locations.
Blockbuster Inc., whose headquarters moved from Fort Lauderdale, Florida, to Dallas, Texas, in 1996, filed for bankruptcy in late 2010.
Between the poor state of the U.S. economy over the last few years and intense competition from competitors like Netflix, Blockbuster had continued to experience significant and sustained losses prior to filing for bankruptcy protection. At the time of filing, the company was $900 million in debt. Blockbuster attempted to close many of its stores and reorganize its business both before and after filing for bankruptcy, but earlier this year the U.S. Department of Justice disclosed that the company is out of funds and needs to liquidate.
To address the consequences of a possible purchase of the dying company, Blockbuster sent a letter to the Texas Workforce Commission, a regulatory body, in February warning that a sale could result in 865 employee layoffs. This number includes all 238 employees remaining at its Dallas headquarters and 627 employees at its McKinney distribution facility. While the letter was a valiant attempt that Blockbuster was looking to stay afloat and protect its employees, the letter was to no avail.
In early April, the Dish Network won Blockbuster at auction for $320 million.
Business analysts anticipate that Dish Network will close further Blockbuster stores as it works to resolve the company’s dire financial situation. While the fate of many store employees is already sealed, what will happen to other existing Blockbuster employees in Dallas and McKinney, Texas, and elsewhere in the country, is still a mystery. Regardless, the country will continue to feel the effects of both the company’s bankruptcy and its recent sale over the coming months.
If you are considering bankruptcy as an option for either yourself or your business, be sure to seek the advice of an experienced Texas bankruptcy attorney before trying to reorganize or file for bankruptcy protection. A lawyer versed in bankruptcy law may be able to help you protect you or minimize any impact you may feel throughout this process.