BLOCKBUSTER INC - FORM 8-K - EX-99.1 - MONTHLY OPERATING REPORT - December 1, 2011

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8-K - FORM 8-K - BLOCKBUSTER INCd263554d8k.htm

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

     X      
In re:    :       Chapter 11
   :      
BB LIQUIDATING INC., et al. 1    :       Case No: 10-14997
   :      
Debtors.    :       Jointly Administered
     X      

Monthly Operating Report For

September 2011

 

DEBTORS’ ADDRESS:  

2100 Ross Avenue, 21st Floor

Dallas, Texas 75201

DEBTORS’ ATTORNEYS:   Stephen Karotkin
  WEIL, GOTSHAL & MANGES LLP
  767 Fifth Avenue
  New York, New York 10153
  Telephone: (212) 310-8000
  Facsimile: (212) 310-8007
  -and-
  Martin A. Sosland (admitted pro hac vice )
  WEIL, GOTSHAL & MANGES LLP
  200 Crescent Court, Suite 300
  Dallas, Texas 75201
  Telephone: (214) 746-7700
  Facsimile: (214) 746-7777

This Monthly Operating Report (“MOR”) has been prepared solely for the purpose of complying with the monthly reporting requirements applicable in these chapter 11 cases and is in a format acceptable to the United States Trustee. The financial information contained herein is limited in scope and covers a limited time period. Moreover, such information is preliminary and unaudited, and is not prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States.

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.

 

/s/ Bruce Lewis

      11/1/2011
Bruce Lewis     
Principal Executive Officer     
BB Liquidating Inc.     

1 The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are: BB Liquidating Inc. (5102); BB Liquidating Canada Inc. (1269); BB Liquidating Digital Technologies Inc. (9222); BB Liquidating Distribution, Inc. (0610); BB Liquidating GC, Inc. (1855); BB Liquidating Global Services Inc. (3019); BB Liquidating International Spain Inc. (7615); BB Liquidating Investments LLC (6313); BB Liquidating Procurement LP (2546); BB Liquidating Video Italy, Inc (5068); BB Liquidating ML, LLC (5575); BB Liquidating Trading Zone Inc. (8588); and BB Liquidating B2 LLC (5219).

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

 

In re  

 BB LIQUIDATING INC., et al.

      Case No.        10-14997
   Debtor      Reporting Period:    September 2011
       Federal Tax I.D. #          52-1655102

CORPORATE MONTHLY OPERATING REPORT

August 2011

 

REQUIRED DOCUMENTS

    Form No.   Document
Attached		    Explanation
Attached

Schedule of Cash Receipts and Disbursements

    MOR-1   x   

Bank Reconciliation (or copies of debtor’s bank reconciliations)

    MOR-1 (CON’T)   x   

Copies of bank statements

    MOR-1 (CON’T)      x

Cash disbursements journals

    MOR-1 (CON’T)   x   

Statement of Operations

    MOR-2   x   

Balance Sheet

    MOR-3   x   

Status of Post-petition Taxes

    MOR-4   x   

Copies of IRS Form 6123 or payment receipt

         not applicable

Copies of tax returns filed during reporting period

         not applicable

Summary of Unpaid Post-petition Debts

    MOR-4   x   

Listing of Aged Accounts Payable

         x

Accounts Receivable Reconciliation and Aging

    MOR-5   x   

Taxes Reconciliation and Aging

    MOR-5   x   

Payments to Insiders and Professionals

    MOR-6   x   

Post Petition Status of Secured Notes, Leases Payable

    MOR-6   x   

Debtor Questionnaire

    MOR-7   x   

 

FORM MOR

Page 2 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

(in millions)

 

     September 2011     YTD September 2011  

Cash flows from operating activities:

     

Net income (loss)

    $ (0.8 )    $ (200.4 ) 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

     

Depreciation and intangible amortization

      —          39.4   

Rental library purchases

      —          (66.7 ) 

Rental library amortization

      —          113.3   

Loss on sale/disposal of store operations

      —          —     

Impairment of long-lived assets

      —          0.6   

Non-cash share-based compensation

      —          —     

Gain on sale of store operations

      —          —     

Deferred taxes and other

      —          2.1   

Changes in operating assets and liabilities:

        —     

Change in receivables

      —          13.1   

Change in merchandise inventories

      —          44.2   

Change in prepaid and other assets

      —          27.8   

Change in liabilities subject to compromise

      (0.8 )      229.5   

Change in accounts payable

      —          (139.7 ) 

Change in accrued expenses and other liabilities

      (1.7 )      (125.9 ) 
  

 

 

    

 

 

  

Net cash provided by (used in) operating activities

      (3.3 )      (62.7 ) 
  

 

 

    

 

 

  

Cash flows from investing activities:

     

Capital expenditures

      —          (5.1 ) 

Change in reserve for Operating Period claims

      (4.0 )      28.1   

Proceeds from sale of store operations

      —          —     

Other investing activities

      —          3.4   
  

 

 

    

 

 

  

Net cash provided by (used in) investing activities

      (4.0 )      26.4   
  

 

 

    

 

 

  

Cash flows from sale of assets to DISH Network:

     

Loss on Sale

      —          (582.8 ) 

Change in rental library on sale

      —          143.4   

Change in merchandise inventories on sale

      —          56.2   

Change in receivables on sale

      —          53.3   

Change in prepaid and other assets on sale

      —          382.2   

Change in fixed assets on sale

      —          87.2   

Change in restricted cash on sale

      —          —     
  

 

 

    

 

 

  

Net cash provided by sale to Dish Network

      0.0        139.5   
  

 

 

    

 

 

  

Cash flows from financing activities:

     

Proceeds from DIP Financing

      —          —     

Repayments on DIP Financing

      —          —     

Repayments on senior secured notes

      —          (124.6 ) 

Debt financing costs

      —          —     

Capital lease payments

      —          (0.8 ) 
  

 

 

    

 

 

  

Net cash provided by (used in) financing activities

      0.0        (125.4 ) 
  

 

 

    

 

 

  

Effect of exchange rate changes on cash

      —          —     
  

 

 

    

 

 

  

Net (decrease) increase in cash and cash equivalents

      (7.3 )      (22.2 ) 

Cash and cash equivalents at beginning of period

      51.3        66.2   
  

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 44.0      $ 44.0   
  

 

 

    

 

 

  

 

FORM MOR-1

Page 3 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

BANK RECONCILIATIONS

Continuation Sheet for MOR-1

 

    GL#   Bank Name    Bank Balance      Deposits &
Transfers in
Transit		      Outstanding
checks		     Other
Reconciling
Items		      GL Balance  

   Cash

   Bank of America    $ 45,493,637       $ —         $ (1,464,677 )    $ —         $  44,028,960   
    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total Cash & Cash Equivalents

    $ 45,493,637       $ —         $ (1,464,677 )    $ —         $ 44,028,960   
    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

 

Bank of America                

Dallas, Texas

         Statement date:      9/30/2011        
   Statement Period    09/01/2011 - 09/30/2011      Statement Beginning Balance         51,682,734.27
   Number of Deposits / Credits    0      Amount of Deposits / Credits         —  
   Number of Checks    162      Amount of Checks         2,038,705.07
   Number of Other Debits    5      Amount of Other Debits         4,150,392.14
           Statement Ending Balance         45,493,637.06

 

FORM MOR-1 (CONT.)

Page 4 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

SCHEDULE OF CASH DISBURSEMENTS

(in millions)

Continuation Sheet for MOR-1

 

           September 2011        

Cash Balance as of 8/31/11

        $ 51,317,343   

Cash disbursements during the period:

       

April professional fees (as shown on MOR 6):

       

Pricewaterhouse Coopers

      (60,000 )     

Kurtzman Carson Consultants

      (60,606 )     

Sidley Austin

      (17,266 )     

Alvarez & Marsal

      (146,012 )     

Weil Gotshal

      (197,342 )     
  

 

 

      

Total April professional fees

        (481,226 )   

Transfer to reserve for Operating Period claims

        (4,000,000 )   

Contract labor:

       

Legal

      (4,285 )     

Claims administration

      (11,875 )     
  

 

 

      

Total contract labor

        (16,160 )   

Payments for Administrative Priority Expenses

        (758,723 )   

Pyaments for insurance

        (200,000 )   

Payments for property taxes

        (1,747,573 )   

Payments for miscellaneous G&A

        (84,701 )   
    

 

 

    

Total cash disbursements during the period

          (7,288,383 ) 
      

 

 

  

Cash Balance as of 9/30/11

        $ 44,028,960   
      

 

 

  

 

FORM MOR-1 (Cont - disbursements)

Page 5 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

STATEMENT OF OPERATIONS (Income Statement)

(in millions)

 

     September 2011     YTD September 2011  

Revenues:

     

Base rental revenues

    $ —        $ 303.5   

Previously rented product (“PRP”) revenues

      —          140.2   
  

 

 

    

 

 

  

Total rental revenues

      —          443.7   

Merchandise sales

      —          63.0   

Other revenues

      —          12.6   
  

 

 

    

 

 

  

Total Revenue

      —          519.3   
  

 

 

    

 

 

  

Cost of sales:

     

Cost of rental revenues

      —          175.9   

Cost of merchandise sold

      —          68.7   
  

 

 

    

 

 

  

Total cost of sales

      —          244.6   
  

 

 

    

 

 

  

Gross profit

      —          274.7   
  

 

 

    

 

 

  

Operating expenses:

     

General and administrative

      0.8        459.9   

Advertising

      —          5.5   

Depreciation and intangible amortization

      —          39.4   

Impairment of goodwill and other long-lived assets

      —          0.6   
  

 

 

    

 

 

  

Total Operating Expenses

      0.8        505.4   
  

 

 

    

 

 

  

Operating income (loss)

      (0.8 )      (230.7 ) 

Interest expense

      —          0.6   

Interest income

      —          (0.1 ) 

Other items, net

      —          (1.4 ) 
  

 

 

    

 

 

  

Income (loss) from continuing operations before reorganization items and income taxes

      (0.8 )      (231.6 ) 

Reorganization items, net (income)/loss

      —          (46.9 ) 

(Benefit)/provision for income taxes

      —          1.0   

Equity in (income)/loss of non-debtor subsidiaries

      —          14.7   
  

 

 

    

 

 

  

Income (loss) from continuing operations

      (0.8 )      (200.4 ) 

(Loss) from sale of assets to DISH Network

      —          (582.8 ) 

Income (loss) from discontinued operations, net of tax

      —          —     
  

 

 

    

 

 

  

Net income (loss)

      (0.8 )      (783.2 ) 

Preferred stock dividends

      —          —     
  

 

 

    

 

 

  

Net income (loss) applicable to common stockholders

   $ (0.8 )    $ (783.2 ) 
  

 

 

    

 

 

  

 

FORM MOR-2

Page 6 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

BALANCE SHEET

(in millions)

 

     As of 9/30/2011  

Assets

   

Current assets:

   

Cash and cash equivalents

    $ 44.0   

Reserve for Operating Period claims

      7.5   

Merchandise inventories

      —     

Rental library, net

      —     

Prepaid and other current assets

      —     
  

 

 

  

Total current assets

      51.5   

Property and equipment, net

      —     

Deferred income taxes

      —     

Investment in non-debtor subsidiaries

      —     

Intangibles, net

      —     

Restricted cash

      —     

Other assets

      —     
  

 

 

  

Total Assets

    $ 51.5   
  

 

 

  

Liabilities and Stockholders’ Equity (Deficit)

   

Current liabilities:

   

Accounts payable

    $ 3.7   

Accrued expenses

      3.3   

Debtor-in-possession loan

      —     

Deferred income taxes

      —     
  

 

 

  

Total current liabilities

      7.0   

Other liabilities

      —     
  

 

 

  

Total Liabilities before LSTC

      7.0   

Liabilities subject to compromise

      1,354.0   
  

 

 

  

Total Liabilities

      1,361.0   
  

 

 

  

Total stockholders’ equity (deficit)

      (1,309.5 ) 
  

 

 

  

Total Liabilities and Stockholders’ Equity (Deficit)

    $ 51.5   
  

 

 

  

 

FORM MOR-3

Page 7 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

STATUS OF POST-PETITION TAXES

 

Federal

    Beginning Tax      Amount
Withheld and/or
Accrued		      Amount Paid     Ending Tax  

Withholding

    $ —         $ —         $ —        $ —     

FICA-Employee

      —           —           —          —     

FICA-Employer

      —           —           —          —     

Unemployment

      —           —           —          —     

Income

      —           —           —          —     

Other:

         —           —       
  

 

 

     

 

 

     

 

 

    

 

 

  

Total Federal Taxes

      —           —           —          —     
  

 

 

     

 

 

     

 

 

    

 

 

  

State and Local

           

Withholding

      —           —           —          —     

Sales

      —           —           —          —     

Excise

         —           —       

Unemployment

      —           —           —          —     

Real Property*

      —           —           —          —     

Personal Property*

      5,036,778         —           (1,747,573 )      3,289,205   

Other: Income/Franchise

      —           —           —          —     
  

 

 

     

 

 

     

 

 

    

 

 

  

Total State and Local

      5,036,778         —           (1,747,573 )      3,289,205   
  

 

 

     

 

 

     

 

 

    

 

 

  

    

           
  

 

 

     

 

 

     

 

 

    

 

 

  

Total Taxes

    $ 5,036,778       $ —         $ (1,747,573 )    $ 3,289,205   
  

 

 

     

 

 

     

 

 

    

 

 

  

SUMMARY OF UNPAID POST-PETITION DEBTS

Attach aged listing of accounts payable.

 

     Number of Days Past Due  

DESCRIPTION

    Current          0-30              31-60              61-90            Over 91        Total  

AP - Product

    $ —         $ —         $ —         $ —         $ —         $ —     

AP - Legal & Professional Fees

      3,761,323         —           —           —           —           3,761,323   

AP - Other

      —           —           —           —           —           —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL POST-PETITION DEBTS

    $ 3,761,323       $ —         $ —         $ —         $ —         $ 3,761,323   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

* The Real Property and Personal Property taxes are considered “postpetition” based off of when the payment is assessed by the taxing authority.

The detail of the AP - Legal and Professional Fees can be seen on MOR-6. The bar date of 6/15/11 for administrative claims required all other AP to be reclassified to liabilities subject to compromise.

The Debtors did not file Form 6123 during this period. The debtor did file a consoldiated Form 1120 US Corporation Income Tax Return on 9/15/11.

 

FORM MOR-4

Page 8 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

ACCOUNTS RECEIVABLE RECONCILIATION AND AGING

 

Accounts Receivable Reconciliation

    Amount  

Total Accounts Receivable at the beginning of the reporting period

    $ —     

Plus: Amounts billed during the period

      —     

Less: Amounts collected during the period

      —     

Less: Amounts written off during the period

      —     

Less: Amounts reserved during the period

      —     

Change in store accounts receivable, net

      —     

Accounts Receivables sold to DISH Network

      —     
  

 

 

  

Total Accounts Receivable at the end of the reporting period

    $ —     
  

 

 

  

 

Accounts Receivable Aging

    9/30/2011  

0 - 30 days old

    $ —     

31 - 60 days old

      —     

61 - 90 days old

      —     

91 - 120 days old

      —     

121+ days old

      —     

Total Aged Accounts Receivable

      —     

Store Accounts Receivable

      —     

Total Accounts Receivable

      —     

Less: Bad Debts (Amount considered uncollectible)

      —     
  

 

 

  

Net Accounts Receivable***

    $ —     
  

 

 

  

TAXES RECONCILIATION AND AGING

 

Taxes Payable

    Current      1-30 Days      31-60 Days      61-90 Days      91+ Days      Total  

Federal

    $ —         $ —                  $ —     

State and Local

      —                       —     

Other

      3,289,205         —                    3,289,205   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Taxes Payable

    $ 3,289,205       $ —         $ —         $ —         $ —         $ 3,289,205   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

FORM MOR-5

Page 9 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

PAYMENTS TO INSIDERS AND PROFESSIONALS

 

INSIDERS

NAME

   

TYPE OF PAYMENT

   

AMOUNT PAID

   

TOTAL PAID TO DATE

(1) NONE

         

    

         

    

         

    

         

    

         

    

         

    

         

    

         
        

 

TOTAL PAYMENTS TO INSIDERS

         
        

 

 

(1) No payments other than ordinary wages and benefits occurred during the reporting period.

 

PROFESSIONALS

  

NAME

   DATE OF COURT ORDER
AUTHORIZING PAYMENT		     AMOUNT APPROVED     AMOUNT PAID
September 2011		     TOTAL PAID TO DATE     TOTAL INCURRED &
UNPAID*		  

SIDLEY AUSTIN
LLP (1)

     9/27/2010      $ 3,544,061      $ 17,266      $ 3,544,061      $ —     

JEFFERIES & COMPANY INC (1)

     9/27/2010        1,550,496        —          1,550,496        —     

ALVAREZ & MARSAL NORTH AMERICA
LLC (3)

     10/27/2010        5,213,678        146,012        5,113,678        100,000   

ROTHSCHILD INC (3)

     11/2/2010        3,105,644        —          2,934,810        170,834   

KURTZMAN CARSON CONSULTANTS
LLC (3)

     9/23/2010        4,130,015        60,606        4,055,015        75,000   

DJM ASSET MANAGEMENT
LLC (3)

     11/23/2010        150,000        —          150,000        —     

RETAIL REGROUP
INC (3)

     11/23/2010        150,000        —          150,000        —     

DELOITTE TAX
LLP (3)

     11/9/2010        583,711        —          467,248        116,463   

SKADDEN ARPS SLATE MEAGHER & FLOM
LLP (1)

     9/27/2010        211,440        —          211,440        —     

KORN/FERRY
INTERNATIONAL(3)

     11/10/2010        142,132        —          142,132        —     

COOLEY GODWARD KRONISH LLP (2)

     11/23/2010        2,769,127        —          2,135,483        633,644   

FTI CONSULTING (2)

     12/2/2010        909,331        —          718,563        190,768   

BLOODWORTH CARROLL & BANOWSKY PC (3)

     11/23/2010        164,395        —          131,516        32,879   

RAY & GLICK
LTD. (3)

     11/23/2010        959,250        —          767,400        191,850   

CHAIKEN LEGAL GROUP PC (3)

     11/23/2010        350,055        —          280,044        70,011   

SHEPPARD
MULLIN (1)

     9/27/2010        327,327        —          327,327        —     

WEIL, GOTSHAL & MANGES (3)

     10/27/2010        7,606,343        197,342        5,946,779        1,659,564   

PRICEWATERHOUSE COOPERS (3)

     2/8/2011        1,811,368        60,000        1,474,506        336,862   

DELOITTE FINANCIAL ADVISORY (3)

     2/8/2011        363,993        —          288,837        75,156   

ERNST & YOUNG (3)

     4/4/2011        524,806        —          416,514        108,292   
   

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL PAYMENTS TO PROFESSIONALS

     $ 34,567,172      $ 481,226      $ 30,805,849      $ 3,761,323   
   

 

 

    

 

 

    

 

 

    

 

 

  
* INCLUDE ALL FEES INCURRED, BOTH APPROVED AND UNAPPROVED
(1) Fees paid pursuant to the DIP Financing Order for professionals of the DIP lenders and DIP Agent.
(2) Fees for professionals retained to represent Unsecured Creditors’ Committee
(3) Fees for professionals retained to represent BB Liquidating Inc.

POST-PETITION STATUS OF SECURED NOTES, LEASES PAYABLE

AND ADEQUATE PROTECTION PAYMENTS

 

NAME OF CREDITOR

    SCHEDULED MONTHLY
PAYMENT DUE		      AMOUNT PAID
DURING MONTH		      TOTAL UNPAID POST-
PETITION		  

DIP Financing

    $ —         $ —         $ —     

DIP Interest

         —           —     

Leases Payable

      —           —           —     

Adequate Assurance Payments - Utilities

      —           —           —     

Adequate Assurance Payments - Insurance

      —           —           —     

    

         

    

         

    

         
     

 

 

     

 

 

  

TOTAL PAYMENTS

       $ —        
     

 

 

     

 

 

  

 

FORM MOR-6

Page 10 of 11

In re  

 BB LIQUIDATING INC., et al.

       Case No.    10-14997
   Debtor       Reporting Period:    September 2011

 

DEBTOR QUESTIONNAIRE

 

     

Must be completed each month. If the answer to any of the questions is

“Yes”, provide a detailed explanation of each item. Attach additional sheets

if necessary.

   

Yes

   

No

1   

Have any assets been sold or transferred outside the normal course of business

this reporting period?

         X
2   

Have any funds been disbursed from any account other than a debtor in

possession account this reporting period?

       X
3    Is the Debtor delinquent in the timely filing of any post-petition tax returns?       X
4   

Are workers compensation, general liability or other necessary insurance

coverage expired or cancelled, or has the debtor received notice of expiration or

cancellation of such policies?

    X   
5    Is the Debtor delinquent in paying any insurance premium payment?       X
6    Have any payments been made on pre-petition liabilities this reporting period?       X
7   

Are any post petition receivables (accounts, notes or loans) due from related

parties?

       X
8    Are any post petition payroll taxes past due?       X
9    Are any post petition State or Federal income taxes past due?       X
10    Are any post petition real estate taxes past due?       X
11    Are any other post petition taxes past due?       X
12    Have any pre-petition taxes been paid during this reporting period?       X
13    Are any amounts owed to post petition creditors delinquent?       X
14    Are any wage payments past due?       X
15    Have any post petition loans been received by the Debtor from any party?       X
16    Is the Debtor delinquent in paying any U.S. Trustee fees?       X
17   

Is the Debtor delinquent with any court ordered payments to attorneys or other

professionals?

       X
18   

Have the owners or shareholders received any compensation outside of the

normal course of business?

       X
4    The Debtors have only one employee and are not required to maintain workers compensation insurance. The Debtors have received notice that the prior workers compensation insurance has been cancelled.      

 

FORM MOR-7

Page 11 of 11

BLOCKBUSTER INC Reports