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HMV creditors to lose out on £250 million 22 August 2013

Creditors of entertainment retail chain HMV are set to lose over £250 million following the company’s collapse into administration earlier this year.

According to an update report issued by administrators from Deloitte, creditors including the HMV pension fund and other unsecured creditors such as suppliers and landlords are not expected to receive anything from the administration.

HMV entered administration in January 2013 amid increased competition from online retailers, putting its 223 stores and 4,123 employees at risk.

The chain was brought out of administration by Hilco in April, rescuing 141 stores, 25 of which had previously been slated for closure by the administrators, and approximately 2,500 employees.

Bank lenders have already recovered £38.6m from HMV, while advisers to the administrators are in line to receive £15m.

Former HMV owner, record label EMI, is also listed as a secured creditor, although no amount owed to EMI was disclosed.

HMV’s pension fund, entitled to £26m, holds the pensions of HMV staff along with staff of book retailer Waterstones, formerly part of the HMV Group prior to its sale to Alexander Mamut in 2011.

According to a report in The Telegraph, the pension fund has applied to enter the Pension Protection Fund.

Other unsecured creditors are owed approximately £157m, although the administrators report said: “it is not anticipated that a dividend to the unsecured creditors of the Company will be possible.”

Administrators from Deloitte have so far racked up almost £10m in fees from HMV, £4.5m of which have already been paid.

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