Music Zone, a UK music and book retailer backed by Lloyds Development Capital in a £12 million (€18 million; $23 million) buyout, is looking for buyers after entering administration.
A spokesman for Lloyds said the toal outstanding creditor debts amount to £28 million.
The move follows aggressive pricing competition and deteriorating sales across the music and DVD sector, a spokesman for Lloyds said in a statement. HMV and Woolworths, UK retailers, also blamed poor CD and DVD sales for their pre-Christmas profit warnings. The IFPI, a music trade association, reported a 10 percent fall in physical format sales in the first half of the year worldwide.
Accountancy firm Deloitte has been appointed to lead the administration process.
A spokesperson for Music Zone said: “There is a growing number of high street retailers like Music Zone experiencing challenging trading conditions. Pre-Christmas spending was also poorer than expected.”
Bank of Ireland withdrew credit facilities without notice with immediate effect to recover debts. Music Zone said the move left the company and Lloyds with no real alternative other than to appoint administrators.
A spokesman for the Bank of Ireland told UK daily The Daily Telegraph: “Following a period of difficult trading at Music Zone, Bank of Ireland regrettably concluded that it could no longer continue to support the business.”
Bill Dawson, partner at Deloitte, said: “We’re currently trading the business while seeking interested parties to acquire Music Zone as a going concern.”
Silver Screen, a UK DVD retailer backed by private equity group Apax Partners, entered administration in May 2006 as the business failed to compete with internet sales.
Lloyds Development Capital invests in the electrical, financial services, healthcare, information technology and software, leisure and media, retail, specialist engineering and support services sectors.