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Wednesday, 2 January 2013

HMV in administration buyers sought for the business

update:  HMV have confirmed today that they are to appoint administrators and hope to sell the business.  This is a shame but not unexpected.  Please see my post before the news broke today 14/01/2013

If HMV had a very poor Christmas trading period then it is almost inevitable that the company will go into administration or try a company voluntary arrangement.

Online sales of downloaded music and videos have soared in recent months and only last month the company announced that it had seen a 10% decline in sales in the six months up to October and it was likely to breach its banking covenants early next year.

There have been unconfirmed reports that the store managers have been called into a meeting this week about the company's future and many expect the worse.  However, the company has previously said a year ago that it would not rule out a company voluntary arrangement to help its cashflow and allow it to continue to trade.  But if the banks positions is considerably worse now than it was then, which seems likely, then they may seek to appoint administrators.  A CVA only binds the unsecured creditors.  As experienced CVA experts if HMV would like to get in touch for a no obligation chat then we are more than happy to help them look at their options.

HMV's management have been making lots of changes to try and turn around the company with new store designs and product ranges and they have survived for longer than was expected in early 2012 despite massive debt of £176m.  They have sold off their live music business and extracted better terms from their suppliers in exchange for some equity.

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