Blockbuster creditors currently leading Dish Network, Carl Icahn in auction

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A group of creditors that offered $290 million for struggling home entertainment chain Blockbuster Inc. was the lead bidder at midday Tuesday in the company’s bankruptcy auction, according to people present at the New York proceedings.

South Korean telecom firm SK Telecom had the second-highest bid, according to Richard Kanowitz, an attorney representing Blockbuster’s unsecured creditors. Other bidders were satellite television company Dish Network, billionaire investor and Blockbuster creditor Carl Icahn, and a pair of liquidation firms working together.

The creditors, led by Monarch Alternative Capital, have joined together in a venture called Cobalt Video. Their opening $290-million offer was intended as a minimum bid, but other offers were evaluated based in part on how much money would remain as cash to be allocated to creditors. On that basis, Cobalt remained in the lead as of midday, Kanowitz said, though Dish had initially looked like the top bidder when the auction opened Tuesday after initial proceedings on Monday.

Bidding will continue Tuesday afternoon. It’s currently unclear when the auction will end and a new owner will emerge for Blockbuster.

-- Ben Fritz

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Bidders including Dish Network and Carl Icahn lining up for Blockbuster auction