Movie-rental giant Blockbuster Inc. announced in a regulatory filing that it will likely file for bankruptcy; the company's stock plunged after the warning was made public.

Shares of Blockbuster Inc. (BBI) fell 29 percent, a drop of 12 cents, into penny-stock territory. The company's stock is now worth 28 cents a share. 

In the filing, the rental chain cited "increasingly competitive industry conditions," as a cause for its reported operating loss of $394 million last quarter. The filing went on to say that Blockbuster sees "substantial doubt about our ability to continue as a going concern." If the company is not able to improve operating results or does not reorganize it's debt, the filing said Blockbuster "could require us to pursue a restructuring of our indebtedness or file for protection under the U.S. Bankruptcy Code."

As of January 1, 2010 Blockbuster's debt, indcluding capital lease obligations, totaled $964 million. It will have to make $112.5 million in principal payments on debt this year.

f you are considering filing for bankruptcy, it is important to understand all the legal options that are available to you. To speak with an experienced Galveston bankruptcy lawyer of Gipson, Norman & Root, please call 409-765-6000.