HMV in receivership, stores to close by April 30
Friday marked the beginning of the end for heavily-indebted music retailer HMV.
An Ontario Superior Court of Justice approved an application filed by HUK 10 Ltd., a subsidiary of the British restructuring firm Hilco UK that bought HMV in 2011, to place HMV Canada Inc. into receivership.
HMV stores are to cease operations by Apr. 30, according to sale guidelines issued by the court.
Senior Justice Geoffrey Morawetz appointed Gordon Brothers Canada ULC and Merchant Retail Solutions ULC as the agents to sell HMV’s remaining merchandise.
According to the application, HMV owes close to $39 million to HUK 10 as of Jan. 24 and has not made any payments toward its debt since November 2014.
A sworn affidavit submitted by HUK 10 director Christopher Emmott said HMV was profitable from 2011 to 2013, but has had negative earnings since. In 2012, HMV’s revenue was about $266 million, but, by 2016, this had fallen to $193 million, a trend that’s “expected to continue as more customers move to online consumptions of media.”
To continue operations, HMV would requite an “immediate cash injection” of $2 million and then $5 million of additional cash injections every year after that, the affidavit added.
“These financial difficulties, combined with the further decrease in (HMV’s) sales expected over the coming years, means the current situation is not sustainable,” the affidavit said.
“HUK 10 is not prepared to provide further financial support to (HMV) under the current circumstances.”
The application noted that HMV’s inventory is “significantly depleted with no viable alternative support arrange to replenish its stock.”
HUK 10 gave HMV from mid-December 2016 until Jan. 20 to try and get its major suppliers to support its business for at least 2017, but HMV failed to “reach terms that were mutually acceptable.”
Remaining HMV stores will maintain regular opening hours until their final vacate dates, court sale guidelines said, and may advertise with “store-closing,” “everything-on-sale” and “everything-must-go” signs.
HMV currently operates 102 stores in Canada and employs about 1,340 people, most of them at its retail locations.
HMV Canada did not return requests for comment Friday, and staff at its flagship store at 333 Yonge St., which opened in 1991, declined to speak to the media.