Restructuring firm Hilco UK buys HMV debt to gain control

Restructuring group Hilco UK has bought the debt of struggling music and DVD retailer HMV, which went into administration last week, Hilco confirmed through a posting on its website on Tuesday.

Hilco has bought HMV's debt from its lenders Lloyds and Royal Bank of Scotland, giving it effective control of HMV, which collapsed due to stiff competion from online rivals such as Amazon and iTunes as well as weak demand for the music firm's discs and tapes. (See: Cash-strapped HMV faces closure)

''Hilco believes there to be a viable underlying HMV business and will now be working closely with Deloitte who, as administrators, are reviewing the business to determine future options,'' the statement said.

London-based Hilco is a leader in retail restructuring with involvement in many notable projects in the UK and in continental Europe in the past decade. It was founded out of a partnership between UK Management and the Hilco group in the US, the global leader in distressed retail investment and advisory services.

Hilco said that it has not bought the HMV's business itself.

HMV had an estimated debt of around £176 million. The price tag has not been disclosed, but it is believed that Hilco might have paid much lower, as the music firm is under administration.