Advised on the liquidation of HMV Canada

HMV Canada was the operator of the HMV retail chain on Canada with approximately 102 leased retail stores in operation at the time of its receivership and approximately 1,280 employees. HMV Canada was in default of its obligations to its primary secured creditor, HUK 10 Limited, owed roughly $40 million. Richter was appointed receiver of HMV Canada with a plan to liquidate all of the HMV Canada retail locations and warehouses. Our department represented a joint venture comprised of Gordon Brothers Canada ULC and Merchant Retail Solutions ULC, which administered the liquidation as agent on behalf of the HMV Canada and the receiver. This matter was unique in that it was the first “non-possessory” receivership of a retailer, meaning that the receiver was appointed in essence to exercise dominion over the cash of HMV Canada while HMV Canada and its management remained in control of the business. This structure presented unique challenges in structuring the liquidation arrangements which, because of the liquidity issues and the extremely high cost of operating the stores, needed to be put in place very quickly.