Hollywood Studios Tip Blockbuster Canada into Receivership
An Ontario court has pushed Blockbuster Canada into receivership after the subsidiary was used as a collateral by U.S. parent Blockbuster to keep product from the major studios flowing onto its store shelves.
TORONTO -- An Ontario court has tipped Blockbuster Canada into receivership at the request of major Hollywood studios.
The Ontario Superior Court of Justice appointed Grant Thornton to operate Blockubuster Canada’s business and possibly sell off its assets.
The move comes 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.
Blockbuster Canada last year contended that it could continue to operate its neighborhood video stores countrywide, despite the financial straits of its U.S. parent.
But the U.S.-based Blockbuster 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.
Despite the U.S. sale of Blockbuster, Blockbuster Canada still ows $67 million to the major studios, and has defaulted on that debt security.
The major studios asked the Ontario court to push the Canadian subsidiary into receivership to protect “the interests of the collateral trustee and other creditors of Blockbuster Canada.”
That court order was granted on May 3, followed by the appointment of Grant Thornton as receiver.