Blockbuster files for bankruptcy in the U.S.

The Canadian arm of the company says it's operating business as usual.

The dawn of online movie sites like Netflix appears to have dealt a near-fatal blow to rental giant Blockbuster. The company filed for Chapter 11 bankruptcy protection in the U.S. yesterday, a move which will cut the company’s debt by $900-million. Blockbuster Canada said that it was unaffected by the filing, but Blockbuster Argentina wasn’t so lucky. It will stop receiving funds from its American parent company. Blockbuster already announced earlier this year that it would close 10 per cent of its stores. Rival companies have also been hit hard by online moviegoers. The Movie Gallery declared bankruptcy in February and Hollywood Videos liquidated its assets in May.