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HMV’s flagship shop in Hong Kong’s Central district closed after the HMV Retail unit was placed in provisional liquidation to manage its assets. Photo: Enoch Yiu

Debt-ridden music retail giant HMV likely to hold Hong Kong’s biggest liquidation sale in a decade

  • HMV said last month it was closing its seven Hong Kong shops after years of falling demand for CDs and DVDs
  • Firm is likely to sell off its remaining stock at heavily discounted prices, say liquidation experts
HMV Group

Debt-ridden music giant HMV is likely to opt for the biggest liquidation sale in a decade in Hong Kong when it meets with creditors on Thursday, according to experts.

“For a big retail music chain like HMV which has a big stock of CDs, DVDs, audio equipment and lifestyle products, the most likely option is to have a big liquidation sale day to sell the outstanding stock at a heavily discounted price,” said Mat Ng, managing director of JLA-Asia, a veteran liquidation expert.

HMV Digital China Group, owner of the HMV music retail chain, said last month it was winding up its 25-year-old CD and DVD stores in Hong Kong, after years of wilting demand in the era of online streaming.

Ng said the last major liquidation sale was that of 62-year-old Tai Lin Radio Services, a home electronic-appliance chain which closed down in October 2008 under the weight of over HK$100 million of debt. That sale saw items such as TV sets and digital cameras cut by 50 per cent or more from their normal prices.

GEM-listed HMV Digital, chaired by entertainment tycoon Stephen Shiu junior, put its HMV Retail unit into provisional liquidation on December 18. The stores that had once attracted superstars such as Mariah Carey, Boyzone and Backstreet Boys to meet their fans have not been able to generate sufficient income to pay their rent and other expenses.

Wong Sun-keung and Janice Tsui Mei-yuk, both of Vision AS, were appointed as the joint provisional liquidators of HMV Retail. They will host a creditors’ meeting with landlords, staff and other suppliers on Thursday to discuss possible ways forward.

The chain has closed all seven of its stores in Hong Kong and dismissed about 80 staff. It is HK$40 million (US$5.1 million) in debt and has about HK$9 million worth of physical assets in the form of CDs, DVDs and audio equipment, Wong said on December 18.

“For the landlords, they would tend to support a quick liquidation sale to clean out the stock quickly. They could then take the shops back to be leased out again,” Ng said.

Calls from the Post to the provisional liquidators went unanswered.

HMV shuts Hong Kong stores as CDs, DVDs concede to online media

Deloitte China vice-chair Derek Lai, another liquidation expert, said the landlords would be the key to deciding when and where to host a liquidation sale.

“The landlords are major creditors as HMV has unpaid rent of over HK$5 million. The stock is in the shops and the landlords have the right to keep the stock. This would require the liquidators to negotiate with the landlords,” Lai said.

“It would be hard to find a single buyer to take up such a large sum of CDs and DVDs. It is more likely they would open one or two of their flagship shops for the sales to recoup some of the money.”

HMV Digital China still has other businesses such as film making and artist management which are not affected by the retail unit’s liquidation. The company was due to hold its annual shareholders meeting on Monday evening.

A customer finds the store in Causeway Bay closed and no staff in sight. Photo: Danny Lee

The group said last week it had sold its mainland Chinese cinema business to an independent third party for 17.3 million yuan (US$2.52 million) to help improve its financial position, according to a stock exchange filing.

HMV, which was established in the UK in 1921, came to Hong Kong 25 years ago. The UK-based HMV went into administration for a second time on December 28. Its had fallen into administration in 2013 before being rescued by restructuring expert Hilco, but the popularity of online music streaming has made it hard for the physical stores to compete.

AID Partners, a private equity firm directed by local businessman Kelvin Wu King-shiu, took over the Hong Kong unit and its seven shops across the city in 2013. In 2016, Shui bought HMV’s retail music business for HK$408 million from AID Partners with the vision of turning it into a chain of lifestyle shops.

This article appeared in the South China Morning Post print edition as: Bargains galore as HMV set for massive clearance
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