Disaster Zone for music.

Music Zone collapse leaves debts

By Ben Cardew

Record companies are this week battling to recover millions of pounds of debts, after the dramatic collapse of Music Zone.

The 104-strong chain, which just one year ago became the UK's third largest music retailer with the acquisition of 43 former MVC stores, was placed in administration last Wednesday. The company is believed to owe payments for November and December to most of its major suppliers, valued at around #28 to #30m.

For the moment, all shops remain open and administrator Bill Dawson, from Deloitte and Touche's Reorganisation Services division, says his aim is to sell the company as a continuing business.

"At the moment, we are trading the business while seeking interested parties to acquire the business as a going concern. There has been a lot of interest and we are hopeful that a sale of the business will be achieved in due course," he says.

However, Nick Gladding, of retail analyst Verdict, believes that this is an unrealistic goal. "I think that the chain will break up and be sold off to individual retailers. Not many music retailers are looking for new sites now. [Music Zone's] shops could become pound stores in the cheaper locations."