Fears for 300 jobs as HMV collapses
The National Consumer Agency said the HMV's decision not to honour vouchers was disappointing in light of the fact the company sold vouchers right through Christmas. It said "consumers bought them in the expectation that they could be redeemed".
In a statement the agency pointed out that many vouchers would have been bought as Christmas gifts and it said this would "compound the difficulties and impact of this decision for Irish consumers who bought and received these vouchers".
It said if the administrators wanted the company to survive and be restored to profitable trading "they should consider the impact it will have on the future of their business.
Although there is no legal impediment to the administrators taking this decision, the NCA will be pushing for the administrator to reverse this decision not to redeem or refund these vouchers or at the very least, to give HMV customers in Ireland more clarity about whether this position could change in the future".
It said while the outcome of the administration process remained uncertain people should "hold on to their vouchers to see how the situation unfolds."
People who have gift vouchers have now become what are known as unsecured creditors of HMV and are the very last ones to get paid
Consumers who bought themselves vouchers using a credit card maybe able to get a chargeback which will see the credit card company refund them and then go after HMV for recompense but such a process is not certain and certainly not fast.
What has, however, proved more damaging has been the explosion of music and video downloads which have made companies such as HMV all but irrelevant. Nearly three quarters of all music is now sold in a purely digital format.
Late last week, HMV asked its suppliers, which include music labels, games makers and film companies, for about £300 million in additional financing to pay off its bank debt, and fund an overhaul of the company’s business model.
But the proposal was turned down, raising fresh fears that the company would be forced into administration.
The retailer has been hit by the migration to purchasing music and films online. It sought to combat this trend, diversifying into live venues and consumer electronics, but this was not enough to stem the decline in its core market.
A year ago, suppliers stepped in to support HMV, taking a 5 per cent equity stake in the company to secure its position as the UK’s leading entertainment retailer. The closure of HMV could strike a damaging blow to the UK retail market for video games, CDs and DVDs.
Additional reporting by Reuters/Bloomberg