Receiver appointed for Blockbuster Canada amid guarantee problems

By Caroline Salls

Pittsburgh, May 5 - Grant Thornton Ltd. has been appointed receiver of Blockbuster Canada Co.'s assets by the Ontario Superior Court of Justice, according to a news release.

According to the release, the court order gives the receiver the authority to operate Blockbuster Canada's business and assess the various options available for the company and its stakeholders.

The receiver said it expects to launch a process in the near future to identify parties interested in purchasing Blockbuster Canada's enterprise and assets.

Blockbuster Canada's stores are still open for business, the release said.

According to court documents, Blockbuster Canada provided an unlimited guarantee of Blockbuster Inc.'s obligations to suppliers Warner Home Video, Twentieth Century Fox Home Entertainment LLC and Sony Pictures Home Entertainment Inc.

Collateral trustee Home Trust Co. said in the court documents that Blockbuster Canada committed various defaults under its general security agreement with the collateral trustee.

Under the collateral agreement, Blockbuster Canada provided security on all of its assets in favor of the studios in support of its guarantee obligations.

Home Trust said Blockbuster Canada owed the studios $67 million as of May 2.

On Feb. 3, the collateral trustee demanded payment and issued notice of its intention to enforce security.

Payment has not been made, and Blockbuster Canada has not indicated that it will be able to satisfy its guarantee obligations, the filing said.

Blockbuster, a Dallas-based provider of in-home movies and game entertainment, filed for bankruptcy on Sept. 23, 2010. Its Chapter 11 case number is 10-14997.

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