Deloitte, administrator for Woolworths’ wholesale distribution business EUK, and Zavvi’s biggest creditor has called in Ernst & Young as the collapse stings the DVD and games retailer, according to The Times.
A spokesman for Zavvi, previously called Virgin Megastores, denied that Ernst & Young had been parachuted into the business.
The Times said Ernst & Young is on standby as administrator if Zavvi cannot repay its£106 million of debt to EUK. Zavvi has suffered widespread supply issues since EUK went into administration and had to cancel some orders.
Zavvi is indicating on its website that it could not take online orders. “We are currently experiencing supply problems and have temporarily suspended orders until the supply situation is resolved,” it read.
Sir Richard Branson’s Virgin Group could be liable for millions of pounds if the retailer goes bust as it guaranteed Zavvi’s orders with EUK. It has underwritten about 60 days of credit for Zavvi, which ends next month.
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