Blockbuster Inc. on Thursday received three more months to negotiate store leases with its landlords -- its second restructuring extension this week -- giving the video rental chain more time to try to reorganize its business.

Judge Burton Lifland of the U.S. Bankruptcy Court in Manhattan gave the company the go-ahead to extend the lease discussions as the company tries to decide which stores it will close and what a reorganized Blockbuster will look like.

The move came one day after the judge extended until March 21 the company's exclusive right to file a bankruptcy plan. After that, the company could ask the court for another extension or investors could file their own restructuring plan for the company.

Blockbuster has been closing stores since it filed for bankruptcy on September 23, hoping to wipe out much of its $1 billion in debt. It has said it wants to emerge from bankruptcy with more focus on digital delivery of video.

Earlier this week Blockbuster received a three-week extension from its lenders to February 4 from January 14 to file a bankruptcy reorganization plan with the court.

Lifland denied a request by a group of Blockbuster shareholders that had asked the company to give it more financial information, particularly about its push into the digital sector. The group has said in court documents that it believes the company is worth more than $1.2 billion.

In fact, Lifland said that he believes there is very little value in the Blockbuster company, at least that has been shown.

It's pretty hard to say that this debtor is anything but insolvent, Lifland said, adding that he wondered to what lengths the company would need to go to continue operating beyond the three-month extension he had just awarded for the lease negotiations.

The length of time that companies in bankruptcy have to decide which stores to keep open is currently 210 days, including a 90-day extension like the one Blockbuster received. Some lawyers have argued that the time period is too short and does not give a company enough runway to produce a workable restructuring plan.

Blockbuster planned to close 72 stores by the end of 2010 and another 110 stores in the first quarter, court documents show.

The case is In re: Blockbuster Inc, U.S. Bankruptcy Court, Southern District of New York, No. 10-14997.

(Reporting by Caroline Humer; Editing by Lisa Von Ahn and Steve Orlofsky)

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