Zavvi creditors call in restructuring team

Creditors of Zavvi have brought in an emergency restructuring team from Ernst & Young to help the high street music retailer, it was reported today.

Woolworths’ administrator Deloitte has appointed the team as the group’s CD and DVD distribution arm Entertainment UK is Zavvi’s biggest creditor.

Zavvi’s management team is understood to have approved the appointment of Ernst & Young, which is said to be standing by to step in as administrator if Zavvi is unable to repay its £106m (€118m) debt to Entertainment UK, according to the Times newspaper.

The group, which previously traded as Virgin Megastores and operates 11 outlets in Ireland, has been struggling with supply issues following the demise of Woolworths as it had an exclusive supply agreement to get all of its stock from Entertainment UK.

Zavvi has faced problems stocking its stores since Entertainment UK went into administration last month, and it is no longer accepting orders online.

A message on its website says: “We are currently experiencing supply problems and have temporarily suspended orders until the supply situation is resolved.”

It has also cancelled all outstanding orders and refunded customers as it works to find new suppliers.

Zavvi was created last year when Richard Branson sold Virgin Megastores to Zavvi’s chief executive Simon Douglas, reportedly for £1 (€1.20). The group employs around 2,500 people in the UK and Ireland..