Key’ Blockbuster Canada executives could get big bonuses
Steve Ladurantaye, The Globe and Mail
11:21 AM, E.T. | June 3, 2011Canadian
The trustee charged with selling Blockbuster Canada wants to pay more than $600,000 in retention bonuses to managers and executives who hang around through the video chain’s restructuring.
Grant Thornton Inc. will ask an Ontario Superior Court judge to approve the payouts in a court hearing Wednesday. The $523,855 bonus would be split among 28 employees to encourage “key employees to remain with Blockbuster through the receivership process, including the sales process, in an effort to maximize value.”
The receiver also wants another $184,000 to pay 164 regional managers, district managers and store managers as “stay bonuses.”
Anyone who leaves before August 31 would have to pay the money back.
The video rental chain was pushed into receivership earlier this month after Hollywood movie studios called in $70 million in debt racked up by its parent company that had been secured against the Canadian operations.
“Absent the stay bonuses, there is a risk that these management level employees may seek alternate employment which may impair the sales process,” the receiver stated, adding the movie studios have been told about the plan and approve.
The receiver has said it will close about 140 of the chain’s Canadian 400 stores to prepare for a sale, with most closing by the end of June.
In its third report to creditors, Grant Thornton said it would like to have the sale complete by the end of August. There appears to be interest – the receiver said it has held discussions with “several potential purchasers.”
One key element of any sale remains outstanding – the company’s former U.S. parent is now owned by Dish Network, which has told the Canadian chain to stop using Blockbuster related intellectual property, which would include the Blockbuster name.
The issue will be in a U.S. court on June 23, as a judge decides whether it has the ability to enforce the request or whether it should defer to a Canadian court. The receiver has suggested the Canadian chain pay a 4 per cent royalty in order to keep access to the intellectual property.