Fixit team to sort Zavvi's troubles
High Street music, DVD and video games chain Zavvi has called in an emergency restructuring team from accountants Ernst & Young to help it through its current trading troubles.
Sorting out troubles: Zavvi's supplier EUK is owned by Woolworths
Zavvi was forced to close its website and turn to other suppliers after its major supplier EUK was put into administration at the same time as its owner Woolworths at the end of last month.
Ultimately, the team from Ernst & Young could become Zavvi's administrators if they and the management team cannot ensure repayment of its debts.
Formerly Virgin Megastores, Zavvi has been relying on Sir Richard Branson's Virgin Group to keep it in stock in the run-up to Christmas with a rolling loan of between £4m and £5m.
But the retailer also owes a total of £100m to EUK, whose administrators Deloitte asked for the E&Y team to be brought in, with the agreement of Zavvi's management.
Virgin, which sold Zavvi to its management for a nominal £1 just over a year ago, has since then stood as guarantor to stock supplied by EUK on 60-day credit terms.
Those terms ceased when Woolworths went into administration on 28 November.
So far, it is reckoned that Zavvi has sold about half the £100m of stock supplied by EUK and therefore has £50m of cash to pay its supplier's bills when they finally fall due towards the end of January.
But in the meantime, the retailer will also have to find payments for its shop rents early in the New Year and sort out a longer-term solution to replacing its supplies.
Ernst & Young's team is focusing on a wide range of options for the business, from a full-scale restructuring to immediate ways to improve cashflow.
Meanwhile, at Woolworths, the closing-down sale continued for a second day.
Yesterday, when it kicked off, administrators Deloitte said that it resulted in the highest daily turnover in the company's 99-year history.
Most watched Money videos
- Pair of rare 1980s Ford Sierra RS500 Coswotths head to auction
- How to invest to beat tax raids and make more of your money
- Aston Martin unveils new Vantage sports car capable of 202mph
- Mini unveil an electrified version of their popular Countryman
- Iconic Dodge Charger goes electric as company unveils its Daytona
- German car giant BMW has released the X2 and it has gone electric!
- Would you retire abroad for cheaper living costs?
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- Thames Water shareholders refuse £500m lifeline plea
- Disgraced crypto tycoon Sam Bankman-Fried sentenced to 25...
- Insurers are STILL stinging drivers by undervaluing...
- MARKET REPORT: North Sea oil producer Enquest posts loss...
- EnQuest posts another loss after hit from oil and gas...
- William Hill owner 888 agrees to flog assets as it...
- AO World shares surge as online retailer electronics...
- Cost of Baltimore bridge disaster will run into multi...
- Interest rate cuts still 'a long way off' despite falling...
- My friends say I'm a shopaholic but I'm 34, single and...
- Nearly half of young people don't realise buy now, pay...
- Legal firm representing St James's Place customers to...
- JD Sports boss fires out at Nike for failing to produce...
- Spirent ditches Vivai as Keysight gatecrashes deal with...
- My blood boils when I hear critics say Waspi women should...
- Dividend hero SAINT's manager on the best shares for...
- Isa transfer cashback deals: Give your Isa a £2,000 boost...
- The turning of the tide for luxury e-commerce? Shoppers...