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HMV administrators u-turn on gift card stance

Deloitte administrators have relented and announced they will allow gift cards to be used in HMV stores

22 Jan 2013 Accountancy Age

By Rachael Singh

UK retailer HMV

DELOITTE ADMINISTRATORS to HMV have announced they will redeem gift cards at the collapsed music retailer.

Nick Edwards, Rob Harding and Neville Kahn, Deloitte partners, have been appointed joint administrators to HMV Group plc, HMV Music Ltd, HMV Ltd and Fopp Entertainments Ltd.

As with all retail administrations, each owner of a gift card is attributed unsecured creditor status, with these creditors usually paid around 1p for every pound owed.

However, the HMV administrators announced that all gift cards could be redeemed for their full value from today.

The trio of administrators also announced that all proceeds raised by HMV from the sale of charity releases such as the Hillsborough Justice Collective single will be paid in full – another unusual step for an administration.

Edwards said: "The ability of administrators to honour gift vouchers will depend on the specific circumstances of each case. Since our appointment as joint administrators on Tuesday [15 January] afternoon, we have been urgently assessing the companies' financial position.

"I am pleased to confirm that, having concluded this assessment, we are able to honour gift cards. I can also confirm that all money raised by HMV for various charities will be paid in full. We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome.

"We will continue to assess the longer-term options for the business while continuing to trade. I am hopeful this process will result in the business continuing as a going concern."

It has been recently reported that restructuring investor Hilco, which already owns HMV Canada, is interested in purchasing the retailer out of administration.

The Telegraph reports that some of the world's biggest music labels, such as Universal, Warner and Sony, are thought to favour a bid by Hilco to avoid reliance on low-price supermarket and internet distributors.

HMV is headquartered in London and operates out of 223 stores with about 4,123 employees. It has estimated debts of nearly £300m.

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