HMV administration: what are your rights?

HMV

HMV announced last night that it would be putting itself in the hands of the administrators. It's a sad day for the high street, which loses a stalwart of 92 years. It's a worrying time for the 4,000 staff employed by the chain, who are yet to discover their fate. And it's a shock for those who hold vouchers and gift cards.

So what are your rights if you still have gift cards and vouchers from the company?
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Administration

HMV announced last night that its 236 stores were to be put into the hands of the administrator, after it breached the conditions of its loans, its suppliers refused to tide it over and the banks decided enough was enough.

It issued a statement saying: "The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect."

It wasn't a huge surprise, and was something we reported on last week when the chain announced a huge sale. The warnings before Christmas had been a worrying enough sign, and it seems that festive trading was the final nail in the coffin.

Vouchers

At the moment many things are uncertain. There's a great deal of debate as to whether this is the end for the chain, or whether it can find a buyer in order to continue as a much smaller chain and keep the brand alive. The stores will continue to trade while the administrators go over the business and decisions are made about its future.

However, one thing has been made clear by the firm: it will no longer be accepting gift cards and vouchers. It's a real blow for the thousands of people with money still on cards - many of whom will have received them as Christmas gifts.

However, there is still some hope. Citizens Advice has highlighted a loophole which can come in very handy at times like this. It's called the Chargeback scheme, and can be used if whoever bought the vouchers did so on a debit or credit card - regardless of how much they spent.

As long as they bought the gift cards or vouchers less than 120 days ago, they can contact their bank and get them to ask HMV's bank to reverse the transaction and refund the cash back into their account. This only works if there has been a breach of contract that you can prove. However, administration of a company falls into this category.

There are no absolute guarantees. Your card provider may not be able to get the money out of HMV's bank - it depends on its financial position. However, it's definitely worth trying as soon as possible.

If whoever bought the gift card did so on a credit card, and spent more than £100, then the Consumer Credit Act Section 75 gives them the right to a refund, but it's thought that few people will fall into this category.

If the voucher was bought in cash, then it may still be worth hanging on to it just in case. Bear in mind that Comet's administrators initially refused to accept vouchers, and then changed their mind when the picture became clearer. This is not common, but given that it does happen occasionally it may not pay to be too hasty.

Refunds

The company has also said it won't be doing refunds or exchanges. This is harder to get around.

If there's something wrong with the goods you purchased, it depends what the product is, and how you bought it. If it was worth over £100 and you paid by credit card, Section 75 may be your solution again. If not, then you can approach the manufacturer for a repair or refund. This is relatively straightforward for electronic goods, but not for CDs and DVDs, which may just have to be written off.

If it's just an unwanted gift, then your best bet is a resale. There is a plethora of resale sites, but Amazon and eBay are the best-known, and should get you at least some of the value of your unwanted music and film.

Finally, there's the question of whether you should take advantage of the sale and buy online. This is a dangerous option. When the administrator is in charge, at any time they can decide to stop delivery of items bought online and refuse refunds. It'll be in the lap of the gods as to whether you will have your items by then.

You may want to take advantage of the sale. You may want to salvage something good from the demise of a high street favourite, but if you're going to do that then you're far better on the high street - ideally with a credit card to be on the safe side.

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HMV administration: what are your rights?

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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