TORONTO — The receiver in charge of selling Blockbuster Canada is seeking a court order to shut down the movie rental company’s 253 remaining retail locations, saying it had been unable to find a buyer in an intensely competitive environment.
About 150 Blockbuster Canada stores were closed in June, victims of a shift to digital downloads, a tepid economy and new ownership of the U.S. Blockbuster chain.
“As a result of the significant changes in Blockbuster Canada Co.’s competitive landscape, the company’s ’bricks and mortar’ business model has experienced significant challenges over the last few years, largely due to the proliferation of various alternatives available to media consumers in Canada,” the receiver said in a statement issued late Wednesday.
The receiver said the closure process should begin in the next few days, and existing gift cards and rewards programs will no longer be accepted.
A court hearing to consider the closure is scheduled for next Tuesday.
Each Blockbuster store employs about 10 people, meaning about 2,500 people could be out of work. An estimated 1,400 people lost their jobs during the first round of store closures earlier this summer.
The receiver said it has tried to sell the company, but was unable to reach a deal with a buyer that was willing to make the necessary investments to keep the business going.
Blockbuster Canada was placed into receivership by an Ontario court in May in the face of US$70 million in claims from various movie distributors, including Hollywood studios that provide its DVDs, and other suppliers.
The Canadian operations had acted as a guarantor for Blockbuster’s U.S. business, which went into bankruptcy protection in September and was later auctioned off for US$320 million to American satellite TV provider Dish Network Corp. (Nasdaq:DISH). Dish did not buy Blockbuster Canada, which was left to pay the bills.
Earlier this month, a New York court delayed a hearing that would have decided whether Blockbuster Canada could legally use the brand name as it went through receivership.
The new owner of Blockbuster USA had said it did not want the Canadian retailer to use the name, despite the fact that it paid fees.
The receiver in charge of selling Blockbuster Canada had argued that stripping the chain of that right would “devastate” its business.
Blockbuster Canada had been struggling to stay relevant in a time of digital movie downloads.
U.K.-based HMV, once a top music retailer, sold off its Canadian arm in June, to Hilco, a company that agreed to invest up to $25 million to fund the evolution of the national music, video and game retailer as it adjusts to the new world of digital entertainment.
HMV Canada had recently been boosting its offerings to focus on a broader selection of music and film-related products, including T-shirts, headphones, video game controllers, mobile phones and other electronics, in an effort to curb declining revenues as disc sales weaken and more shoppers opt for downloads.