Blockbuster Canada is closing a third of its stores in the next few weeks as the movie and video game rental chain works its way through a court-ordered receivership process.

One store manager said the company has notified staff that 140 locations across the country will be closing their doors on June 18.

The last day customers will be able to rent merchandise at the affected stores is May 26, with a liquidation sale beginning the next day at those locations.

Court-ordered receiver Grant Thornton Ltd. said Blockbuster will be shuttering some stores but did not specify how many or whether any staff would be laid off.

Each store employs about 10 people.

"While Blockbuster Canada will be consolidating certain stores in the next few weeks, the majority of its stores are continuing to operate in the ordinary course during the process," it said in a statement released Tuesday.

The receiver is currently looking for potential buyers interested in Blockbuster Canada's assets. The company is currently operating 400 movie and video game rental stores that employ 4,000 employees across the country.

Employees had already been told they would be paid weekly instead of bi-weekly and were instructed not to sell gift certificates.

Blockbuster Canada was placed into receivership by an Ontario court in the face of $67 million in claims from various movie distributors, including Hollywood studios, and other suppliers.

The Canadian operations had acted as a guarantor for Blockbuster's U.S. business, which went into bankruptcy protection in September, and was subsequently sold to American satellite dish company Dish Network Corp.

Fights to keep using name

Its new owner is now clashing with the Canadian division over whether it will still have the rights to use the Blockbuster name.

Blockbuster Canada had been paying its parent company a fee in exchange for using the name, and argues that if the new owner strips them of that right, it would have a "devastating impact" on its business.

In papers filed in a New York state court, Grant Thornton Ltd. said the Canadian operations need to keep using Blockbuster's intellectual property, which includes its name as well as the computer systems that allow it to rent movies.

A dark cloud has been looming over the Blockbuster brand for several years, and its American unit was already a shadow of its former self when it filed for bankruptcy protection. 

The company had slimmed down to 3,000 stores in the U.S., less than a third of the peak of 9,100 in 2004. In the United States there are about 2,400 currently open with plans to close about 700 more by mid-April.

Blockbuster used to dominate the U.S. movie rental business, but has been losing market share for years as customers shifted to Netflix Inc., video on demand and DVD kiosks that charge as little as $1 per rental.