Image Entertainment Inc. said Tuesday that it defaulted on a $4 million payment that was due Monday, moving the company closer to a possible Chapter 11 reorganization.

On Dec. 11, the struggling Chatsworth home entertainment distributor entered into a third amendment agreement giving it more time to pay from its deadline that day. But the company said it was unable to meet Monday’s deadline. The $15.7 million senior convertible note, with interest of 8.875 percent, is supposed to be paid off on Aug. 30, 2011.

In the event of default, the lender, Wachovia Capital Finance Corp., is entitled require late fees and other penalties. Image said it does not have the money, or access to the money, to pay all of its creditors.

“The company continues to work with its financial advisor to explore strategic alternatives,” Image said in a statement, which could include filing for bankruptcy.

Image continues to have challenges getting a greater percentage of revenue from currently popular media formats. While Blu-ray disc sales in the third quarter more than doubled to $2.6 million and digital distribution deals rose nearly 9 percent to $1 million, the company is still dependent on standard DVD sales, which fell more than 12 percent to less than $25 million.

Shares were down 24 cents, or 47 percent, to 27 cents in midday trading on the Nasdaq.