Blockbuster Canada Assets On The Block

8:54 AM PST 05/24/2011 by Etan Vlessing
Bloomberg/Getty Images

After the Hollywood studios tipped Blockbuster Canada into receivership, around 400 stores nationwide have been put under the sales gavel.

TORONTO – Around 400 Blockbuster Canada video stores in receivership stand to be sold off or shut down.

Grant Thornton, the court-appointed receiver, on Tuesday said it has started a “sales process” that is understood to see around 140 stores shuttered and the rest potentially land with a new owner.

"We are hopeful that the process approved last Friday will result in resolution of the issues currently facing Blockbuster Canada Co,” Michael Creber of Grant Thornton said in a statement.

The Ontario Superior Court of Justice on May 3 named Grant Thornton to operate Blockubuster Canada’s business and sell off its assets.

Court-directed receivership came six months after U.S.-based Blockbuster filed for Chapter 11 bankruptcy protection, before being sold to satellite TV provider Dish Network for $228 million.

Dish Network, for its part, is looking to distance itself from the Canadian operation by forcing a change of the Blockbuster Canada name that Canadians readily recognize.

U.S. court filings indicate Grant Thornton is resisting that legal motion by arguing the Blockbuster Canada name “is critical to Blockbuster Canada’s ongoing business operations.”

The U.S.-based Blockbuster chain earlier offered the Canadian subsidiary as collateral to the home entertainment divisions of Warner Bros., Twentieth Century Fox and Sony Pictures to ensure they kept supplying their product.

The U.S. sale of Blockbuster still left around $67 million owed by Blockbuster Canada to the major studios.

An eventual default on that debt security prompted the major studios to ask the Ontario court to push the Canadian subsidiary into receivership to protect creditor interests.

Grant Thornton now intends to close stores as it prepares the chain for a new owner.

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