with the parties that control the IP
may be a defining factor in whether
a successful turnaround is possible.
In the case of Blockbuster Canada,
the brand name, logo, and back-office support systems were owned
by the U.S. parent company. To allow
the company to continue operations
and preserve value during the sale
process in Canada—and eventually
through the wind-down process—
the receiver commenced Chapter 15
proceedings in the U.S. This provided
a stay of proceedings and bought
time for a settlement agreement to be
negotiated with the U.S. parent that
would allow the Canadian operation
to continue to use the IP and support
services during the proceedings. That
the IP was not owned by Blockbuster
Canada reduced the likelihood that
the receiver could complete a sale
of Blockbuster Canada’s business,
including its IP, as a going concern.
Because of the changing competitive
retail environment, retailers view
restructuring as an opportunity to
eliminate or reduce their retail footprint.
For example, a large retail location
may be replaced with a smaller kiosk.
Under the BIA and CCAA, mechanisms
are available to assign, repudiate, or
disclaim a lease without the landlord’s
consent. In practice, these are used
to terminate unfavorable leases,
stay a landlord’s right to exercise
distraint, and sell/assign leases.
In addition, the BIA provides for the
valuation of a landlord’s damage
claim for purposes of voting on and
participating in turnaround plans. The
continued on page 22
Because Canadian legislation
tends to be more creditor-friendly, the relationship with
the parties that control the
IP may be a defining factor
in whether a successful
turnaround is possible.
LOS ANGELES • SEATTLE • DALLAS
CHICAGO • ATLAN TA • CHARLO TTE • NE W YORK