The US chain, which has 700 stores in the UK, has been suspended on the New York Stock Exchange after its shares fell more than 76 per cent.
The firm has asked law firm Kirkland & Ellis and investment bank Rothschild to examine restructuring or bankruptcy, an unnamed source told Reuters.
The company has struggling to tackle a variety of threats, including online retailers, video downloads and mailed rentals. Restructuring has also left it hundreds of millions of pounds in debt.
The first Blockbuster in Britain opened in 1989 in London. Britain is now the firm's largest market outside the US.
MCV has contacted Blockbuster UK for response.