Music store Zavvi has gone into administration

The chain, which used to be Virgin Megastore, has appointed Ernst & Young as administrators after it was badly affected by the demise of its main supplier, Woolworth’s unit Entertainment UK, which went into administration on 27 November.

Ernst & Young has been appointed administrator of Zavvi UK and as liquidator of Zavvi Guernsey, although Zavvi Ireland, which has 11 stores, has not been declared insolvent.

The administrators for the UK business are Tom Jack, Simon Allport and Alan Hudson, while Jack and Andrew Dann were appointed as liquidators of Zavvi Guernsey.

In a statement, Ernst & Young said: ‘On 27 November 2008 Entertainment UK Limited, the group’s main supplier, went into administration. Since this time the group has been unable to source stock in the usual way and has been forced to enter into new trading arrangements.’

‘The directors understand it is unlikely that Entertainment UK will be sold as a going concern and the Zavvi Group has continued to experience significant difficulty in obtaining stock on favourable credit terms. This has resulted in considerable working capital difficulties as a result of the failure of EUK, in addition to continuing operating losses.’

Jack said: ‘In the absence of a buyer for Entertainment UK, and with dire trading conditions on the high street, the Zavvi Group has seen a material fall in sales and the directors have now been forced to place parts of the group into administration.’

‘The administrators intend to continue to trade Zavvi UK with a view to selling all or part of its business as a going concern.’

Simon Douglas and Steve Peckham, the group’s founders, said: ‘We have done all that is possible to keep the business trading, but the problems encountered with Entertainment UK, and particularly its recent failure, has been too much for the business to cope with.’