Blockbuster Canada Files for Bankruptcy Protection23 May, 2011 By: Erik Gruenwedel
400-store chain seeks to remain open during reorganization, litigation.
Blockbuster Canada has filed for Chapter 15 bankruptcy protection, according to a filing with U.S. Bankruptcy Court in New York.
The 400-store subsidiary to Dallas-based Blockbuster Inc., filed the motion — a provision in a Chapter 11 filing that incorporates foreign-based properties — May 20 in hopes of regaining control of its finances and operations.
Dish Network LLC, which acquired the assets and rights to Blockbuster for $320 million, is trying to force Blockbuster Canada and, separately, NCR Corp., to drop the Blockbuster brand from their respective store and kiosk-based businesses.
“Blockbuster Canada intends to vigorously contest the rejection motion,” the company said in the filing.
The company said eliminating the Blockbuster name from its operations would negatively impact its ability to sell its operations, among other issues. The move would appear to help studios since without the Blockbuster name the Canadian operations would be difficult to sell and creditors and investors recouping their investments.
“Without the [bankruptcy filing], the receiver would not be able to ensure the fair and efficient administration of the Canadian proceedings in a manner that protects the interests of all of Blockbuster Canada’s creditors,” the company said in the filing.
Previously, major U.S. studios forced Blockbuster Canada into receivership after exercising leverage obtained when former Blockbuster parent put the Canadian operations up as collateral to ensure shipments of new release discs.
Blockbuster Canada listed liabilities and assets of more than $100 million, which includes about $70 million owed studios.