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HMV debts revealed in Statement Of Affairs

By | Published on Monday 4 March 2013

HMV

Banks, professional service providers, a plush London hotel and the tax man were amongst the creditors owed cash when HMV went into administration in January, a ‘statement of affairs’ filed by administrators Deloitte has revealed.

The flagging entertainment retailer owed £109 million to its various money lenders when it hit the wall. The servicing of bank debts had become a major drag on HMV in its last eighteen months in business, and it was a failure to renegotiate the terms of those loans – and covenant tests that the company was set to fail – that ultimately caused the business to slip into administration.

According to reports, HMV also owed £20 million to the tax man, and £53.3 million to other creditors, which included headhunter Egon Zehnder (£6000) and accountancy firms KPMG (£155,000) and Ernst & Young (£74,500). Meanwhile £700 was owed to London’s Goring Hotel, where Kate Middleton apparently spent her last night as a single woman, thus finally giving Sky News a royal angle on the otherwise tedious HMV collapse story.

All the banks owed money by HMV sold on their debts to restructuring specialists Hilco once the firm was in administration, while most of the music and DVD companies supplying stock to the retailer were doing so ‘on consignment’ (ie on a sale-or-return basis) by the time of its collapse, though administrators were reportedly offering said companies a deal on stock in situ to save them the cost and hassle of reclaiming product from HMV stores and warehouses. The terms of all those deals, and any hit taken my money lenders and suppliers, are not currently known.

Hilco, which already owns HMV Canada, remains favourite to take ownership of HMV UK, and to bring the company out of administration. Reports suggest it will do so with a deal worth £50 million and a plan to operate about 130 shops around the UK. HMV’s Irish stores have already been closed, while a small number of shops in Hong Kong and Singapore were last week sold to AID Partners Capital Ltd. It’s still not known what will happen to HMV’s stake in 7digital.



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