* Icahn a leading contender to buy, paper says (Adds details)
NEW YORK Feb 10 (Reuters) - Blockbuster Inc (BLOAQ.PK), which filed for bankruptcy last year, is preparing to put itself up for sale after creditors disagreed on plans to give the chain more cash, the Wall Street Journal reported on Thursday, citing unnamed sources.
Blockbuster now plans to seek buyers, the newspaper reported, saying that investor Carl Icahn and a consortium led by hedge-fund Monarch Alternative Capital are the leading contenders.
A spokesman for Blockbuster declined to comment.
The sales process would be run in bankruptcy court with either Icahn or the Monarch group setting the lowest bid for the company. The chain could be worth more than $300 million, plus the assumption of debt, the newspaper reported.
Citing unnamed sources, the newspaper said that the creditors are concerned about Blockbuster's performance. The company has been hurt as consumers have moved to Netflix Inc (NFLX.O), which delivers movies by mail and the Internet. Blockbuster's reorganization plan had involved increasing its digital delivery.
Icahn and Monarch were not immediately available for comment.
Blockbuster shares were up 22 percent, or 2 cents, at 9.7 cents on the pink sheets. (Reporting by Caroline Humer and Jon Stempel, editing by Gerald E. McCormick, Dave Zimmerman)
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