HMV distributors denied credit insurance

HMV distributors denied credit insurance

HMV distributors denied credit insurance

If recent news that HMV Group is poised to close 40 of its HMV and Waterstone’s stores including its flagship Oxford Street London outlet wasn’t bad enough, fears over a loan covenant and a grim Christmas trading period has only made matters worse.

According to recent press reports Britain’s largest entertainment chain is trading perilously close to its solvency limits and with recent news that distributors to HMV Group have been denied credit insurance is a sure fire signal that those in the know, all but expect HMV to bite the bullet any time soon.

In the wake of the latest crisis HMV obviously cannot continue to trade if its distributors cant/won’t give them stock and those that have been denied credit insurance have reportedly been urgently contacting record labels and publishers demanding an assurance that, should HMV go bust, any bad debts incurred would be covered. If such an assurance is not given it is difficult to see how HMV could continue to trade.

HMV shares have lost 80% of their value in the last two years with a number of City analysts questioning whether it has a viable future and with 1 in 10 stores being closed as part of the downsizing, comparable Christmas sales down almost 14% and when coupled with the Chief executive Simon Fox admitting that meeting that conditions critical loan covenant test in April “will be tight”, it seems that HMV’s fate is all but sealed.

One investor who appears to be bucking the trend with a more positive view is Russian retail magnate Alexander Mamut who has continued to build his stake throughout the bad news to 6.1%.

Credit Insurance firms, like bookmakers will risk assess any given business and offer a premium to the supplying firm accordingly so that all cover in relation to goods supplied to HMV Group was removed by one credit insurance firm on 12 January is no different to a bookmaker suspending all bets for any given market on the assumption that the outcome is practically certain.

If you are worried about your customers going out of business and incurring bad debt/s as a result, get in touch with Factoring Finance and we can put in place a bespoke cover to help you protect against insolvency or default of your customers. All cover is tailored to your individual trading requirements, foreign and domestic and can put in place to complement an invoice factoring or invoice discounting package OR as a standalone cover


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