Blockbuster bankruptcy filing likely

Blockbuster Inc, the world's largest movie-rental chain, hired the law firm Kirkland & Ellis LLP to explore a possible bankruptcy filing, a person familiar with the situation said. Blockbuster fell as much as 86 percent yesterday before trading was halted.

The law firm was asked to evaluate restructuring options for the company, which may include a "pre-packaged" or "pre-arranged bankruptcy", in which much of the restructuring work is completed out of court, the person said.

A pre-packaged filing is more advanced than a pre-arranged bankruptcy as it includes agreements from creditors about the outcome of the company's reorganization.