UK retailer HMV will enter into administration on Tuesday, the company announced. The move to administration (the European equivalent of bankruptcy here in the U.S.) comes after major suppliers like Universal Music, EMI, Warner Brothers and Disney refused to provide further financing needed for the retailer to continue trading. The company has turned to Deloitte as its administrators after lackluster Christmas sales made the retailer unable to secure terms on various loans. If things go badly it could mean the loss of an estimated 4,500 jobs and the possible closure of over 200 stores.
HMV issued the following statement concerning going into administration:
"On 13 December 2012, the Company announced that as a result of current market trading conditions, the Company faced material uncertainties and that it was probable that the Group would not comply with its banking covenants at the end of January 2013. The Company also stated that it was in discussions with its banks.
Since that date, the Company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach. However, the Board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the Company and certain of its subsidiaries with immediate effect.
The Directors of the Company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business."
Nick Edwards, Neville Kahn, and Rob Harding - partners of Deloitte LLP, will be appointed as the administrators of the company, and HMV's ordinary shares will be suspended from trading on the London Stock Exchange.
We will have more on this story as it develops.