Blockbuster Canada to Shutter 140 Stores25 May, 2011 By: Erik Gruenwedel
Profitable chain was not part of Dish Network’s acquisition, yet was put up as collateral by parent Blockbuster, on which studios want to collect
The receiver in charge of Blockbuster Canada said it plans to shutter upwards of 140 underperforming stores in an effort to make the video chain more attractive to a third-party buyer.
Blockbuster Canada, with more than 400 stores, was a profitable subsidiary Dallas-based Blockbuster put up as collateral to Hollywood studios to ensure disc shipments after it filed for bankruptcy in September 2010.
The studios earlier this month forced the chain into receivership in an effort to put it on the market and recoup $70 million in monies owed for outstanding disc shipments.
Receiver Grant Thornton Ltd. May 20 notified select store personnel about the changes, which include payroll, elimination of gift card allocations and final new-release shipments May 24.
“While Blockbuster Canada will be consolidating certain stores in the next few weeks, the majority of its stores are continuing to operate in the ordinary course during the process,” Thornton CEO Michael Creber said in a statement.
Dish then notified Blockbuster Canada and, separately, NCR Corp., that the two companies could no longer use the Blockbuster name going forward — a demand both companies say Dish has no legal right to enforce.
Grant Thornton last week filed a Chapter 15 bankruptcy motion in New York, which protects foreign subsidiaries of U.S. companies in the process of restructuring internal finances and operations.
The U.S. Bankruptcy Court in New York will hear the Chapter 15 motion June 2.