Deloitte administrators manage to rescue HMV stores

DELOITTE ADMINISTRATORS have managed to rescue collapsed music retailer HMV.

Nick Edwards, Rob Harding and Neville Khan, partners at Deloitte, were appointed joint administrators to HMV Group, HMV music, HMV and Fopp Entertainments on 15 January.

The sale of the business to the secured creditors Hilco will see 2,643 jobs saved and 141 stores, Accountancy Age understands.

At the time of its collapse HMV had about 222 stores and employed about 6,500 staff. However, 81 stores were during the administration.

The administrators had announced up to 120 stores that were earmarked for closure, however, restructuring experts Hilco, which owns HMV Canada, has taken some of those stores on too.

On 23 January, Hilco bought the secured debt at the retailer from Lloyds Banking Group and the Royal Bank of Scotland.

Ex-BDO and Kroll partner Andrew Pepper is chief operating officer at Hilco. He is a restrucuting expert and recently advised on the managment buy-outs of Allied Carpets, Borders and Habitat. He supports chief executive Paul McGowan who is also a charted accountant. 

It was reported that HMV had a net debt of about £140m with Hilco paying about £15m to control that debt. The investors are expected to pay a further £19m to the lenders at a later date, which means the secured lenders, Lloyds and RBS, will receive just 25p for every pound owed.

About 186 redundancies were made in the head office and distribution centre, including the CEO, since the administrators’ appointment.

However, the administrators were able to sell HMV’s majority shareholding in entertainment venue G-A-Y, which includes bars and the Heaven nightclub, to its founder Jeremy Joseph.

Administrator Edwards said: “We are delighted to have completed the sale of HMV’s UK retail business to Hilco UK.

“The sale of the restructured portfolio secures the employment of 2,643 staff, saves one of the world’s most iconic retail brands and provides a solid financial footing on which the business can be taken forward.

To read Accountancy Age’s stories on HMV click here

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