Unsecured creditors of HMV are set to receive less than a penny in the pound after the failure of the music retailer almost three years ago.
HMV collapsed into administration a few days after Christmas in 2018 when the company, which was owned by Hilco Capital, was crippled by a slump in festive trading.
Doug Putman, a Canadian entrepreneur and vinyl fan, bought the bulk of the business out of administration the following February and is planning to expand it to mark its centenary.
However, despite HMV’s rescue, creditors of the retailer’s former owner are set to receive a negligible return, according to the latest progress report from the administrators.
“We envisage a minimal distribution of less than a penny in the pound will be made to the unsecured creditors [of the retail business],” the administrators at Interpath said. They added that “there are insufficient funds to enable a distribution” to the unsecured creditors of HMV’s ecommerce division.
Advertisement
HMV’s secured creditors, who are owed £46.8 million, face a shortfall of between £21 million and £24 million, the report showed. Interpath’s bill for handling the administration stands at almost £1.9 million and has been capped at £2 million.
The collapse marked the second time in six years that the retailer had failed, having previously entered administration in January 2013. It was sold to Hilco, a restructuring specialist, that year.
Putman has ambitious plans for HMV, despite the acceleration of online shopping during the pandemic. The owner of the Sunrise Records chain in Canada wants to open as many as 70 HMV stores in the next couple of years.
Consumer spending on entertainment jumped to a record £9 billion last year as Britons streamed music and films and played video games to relieve boredom during Covid-19 lockdowns, according to figures from the Entertainment Retailers Association. At the same time, however, spending on physical entertainment products, including DVDs and CDs, fell by 10.7 per cent, or nearly £150 million.
Spokesmen for Hilco and Interpath, formerly the restructuring division of KPMG, declined to comment on the administrator’s report.
