Amongst sliding physical sales and the rise of digital music streaming, HMV Canada has been faced with some hard times in recent years, and they may soon be getting much worse. According to a report from the Globe and Mail, HMV Canada has been met with the news that an affiliated company, which is a major lender, is set to ask the Ontario Superior Court on Friday (January 27) to put the chain into receivership — a move that would effectively close the music chain's more than 100 Canadian stores.
The Globe reports that documents filed with the court this week reveal that the music chain sought support from major labels and media groups to keep stores open through 2017. In owing almost $40 million to affiliated firm HUK 10, the chain may be forced to close all of its more than 100 stores.
UPDATE (1/27, 7 p.m. EST): The Ontario Superior Court of Justice has now officially approved the application for HMV Canada to enter into receivership, meaning all its remaining 102 stores will be closing permanently. Senior Justice Geoffrey B. Morawetz, who approved the application, has appointed Gordon Brothers Canada ULC and Merchant Retail Solutions ULC to sell off all of HMV's remaining merchandise.
According to legal documents obtained by the CBC, all remaining stores in Canada must cease operations by April 30. The majority of HMV Canada's head office staff has been laid off, and the company owes its major suppliers, which include music labels and media studios, a reported $56 million as of December 31.
In an affidavit, HUK 10 director Christopher Emmott said that "the debtor has been unable to reach an agreement with the major suppliers on mutually beneficial terms that would allow the debtor to address its immediate cash flow needs," the Globe reports.
The continuous shift away from purchasing compact discs in favour of streaming has hurt HMV Canada, with the court filings also revealing that the chain has been losing money since 2013. At the end of 2016, its annual sales dropped from $266 million to $193 million.
"As a result of the constant and significant shift in the way media is consumed by customers, especially in North America, the debtor has seen a consistent year-over-year decrease in the sale of physical media," Emmott said.
Unfortunately, this is not the first time HMV Canada has faced major trouble, as more than 100 HMV locations across Canada were sold to the private equity arm of Hilco International Holdings LLC back in 2011.
After being purchased by Hilco, HMV expanded beyond sales of music to offer DVDs, music accessories and T-shirts. Emmott added that HUK 10 has received no cash payments from HMV Canada since November 2014.
HMV first opened in Canada in 1986.
The Globe reports that documents filed with the court this week reveal that the music chain sought support from major labels and media groups to keep stores open through 2017. In owing almost $40 million to affiliated firm HUK 10, the chain may be forced to close all of its more than 100 stores.
UPDATE (1/27, 7 p.m. EST): The Ontario Superior Court of Justice has now officially approved the application for HMV Canada to enter into receivership, meaning all its remaining 102 stores will be closing permanently. Senior Justice Geoffrey B. Morawetz, who approved the application, has appointed Gordon Brothers Canada ULC and Merchant Retail Solutions ULC to sell off all of HMV's remaining merchandise.
According to legal documents obtained by the CBC, all remaining stores in Canada must cease operations by April 30. The majority of HMV Canada's head office staff has been laid off, and the company owes its major suppliers, which include music labels and media studios, a reported $56 million as of December 31.
In an affidavit, HUK 10 director Christopher Emmott said that "the debtor has been unable to reach an agreement with the major suppliers on mutually beneficial terms that would allow the debtor to address its immediate cash flow needs," the Globe reports.
The continuous shift away from purchasing compact discs in favour of streaming has hurt HMV Canada, with the court filings also revealing that the chain has been losing money since 2013. At the end of 2016, its annual sales dropped from $266 million to $193 million.
"As a result of the constant and significant shift in the way media is consumed by customers, especially in North America, the debtor has seen a consistent year-over-year decrease in the sale of physical media," Emmott said.
Unfortunately, this is not the first time HMV Canada has faced major trouble, as more than 100 HMV locations across Canada were sold to the private equity arm of Hilco International Holdings LLC back in 2011.
After being purchased by Hilco, HMV expanded beyond sales of music to offer DVDs, music accessories and T-shirts. Emmott added that HUK 10 has received no cash payments from HMV Canada since November 2014.
HMV first opened in Canada in 1986.