HMV‘s Canadian operation has fallen into receivership, with more than 100 stores set to close by April 30.
The news could have a devastating effect on the physical music business in Canada – the world’s seventh biggest recorded music territory overall, and its sixth biggest across CD and vinyl sales alone.
According to IFPI data, Canada generated US $335.8m (CAD $429.8m) for labels and artists in 2015.
35% of this revenue (US $118.9m) came from physical format sales – actually up 5% on the US $113.2m generated in 2014.
HMV Canada Inc. was placed into receivership in Ontario Superior Court on Friday (Jan 27), with the majority of its senior HQ staff made redundant.
“The company and major suppliers were unable to reach an agreement, on mutually acceptable terms to sustain HMV’s operations and support a recovery,” said court filings submitted by HMV Canada’s parent, Hilco Global/HUK 10 Ltd.
“The company and major suppliers were unable to reach an agreement, on mutually acceptable terms to sustain HMV’s operations and support a recovery.”
HMV Canada court filing
According to a report by the Financial Post, HMV owes its major suppliers, including music labels and movie studios, CAN $56 million (US $42.6m) as of Dec 31.
In total, 102 stores will close, but will be kept open over the next few weeks to liquidate as many assets as possible.
Hilco’s UK HMV business is not believed to have been affected
Restructuring experts Hilco bought HMV Canada for just over CAN $3m in 2011, and runs it as a separate operation to the firm’s British business.
According to FP, court documents show that HMV’s sales fell to CAN $214.4m in FY2015, down from CAN $225m in the prior year.
The filings reveal that HMV Canada posted annual net losses of about CAN $20 million between fiscal 2013 and 2015, with another loss projected for FY2016.Music Business Worldwide