Fears were growing for Britain's 700 Blockbuster stores today after the film rental firm's US parent admitted it is considering filing for bankruptcy.

The chain, which has more than 7500 outlets worldwide, has been buffetted by the falling cost of buying films outright and the arrival of delivery firms such as lovefilm.com.

Blockbuster has tried to reposition itself by selling games, drinks and sweets to make itself the go-to place for a family night in.

Shares of the corporate parent plunged 86% in New York yesterday before trading was suspended. It has hired lawyers and bankers to explore restructuring options.

A Blockbuster spokeswoman in the US downplayed the risk of the company going to the wall, saying the firm was looking at “refinancing and capital-raising initiatives”.

She said it did not intend to file for bankruptcy, though one possibility is a “pre-packaged” bankruptcy, where the matter is settled out of court, and creditors agree to a stay of execution.

Blockbuster's UK head office in Uxbridge did not respond to calls or emails.

The company is the world's biggest movie rental chain with Britain its biggest market outside the US.

Two of its credit facilities expire this August, after which it said it intends to fund itself.

Its first British store opened in 1989 and it has 4.2 million UK members.

In the US, the company has faced increased competition from Netflix, the largest mail-order movie service.