UPDATE: Blockbuster Video Lives to Rewind Another Day

Image by Chris Devers via FlickrBlockbuster, Inc, the Dallas-based video rental chain, narrowly dodged immediate liquidation last week, and instead, will be sold at auction, according to reports by Bloomberg News and legal Web site Am Law Daily.

Blockbuster sought Chapter 11 bankruptcy protection last September in federal bankruptcy court in New York (see "TUOL" post 9/23/10). Judge Burton Lifland accepted the public auction deal presented by lenders, including Monarch Alternative Capital LP. Judge Lifland also ruled that corporate marauder Carl Icahn may submit a bid for Blockbuster at the auction.

No date for the auction of the company founded in 1985 has been announced. "TUOL" wonders if there will be a penalty if the auction last more than 2 or 3 days.