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Zavvi calls in restructuring team from Ernst and Young

Zavvi, formerly the Virgin Megastore, has today called in a corporate restructuring team from accounting specialist Ernst & Young as the demise of Woolworths and its Entertainment UK division continues to send tremors through the high street. As we covered recently, Zavvi was forced to suspend online sales of DVDs, CDs and games due to the demise of the Entertainment UK division of Woolworths which is the largest provider of such merchandise on the high street.

Zavvi is currently understood to be in debt to Entertain UK to the tune of £106 million and with the administrators of Woolworths and Entertainment UK pushing for payment, the company had no choice but to call in professional advisers. The future does not look good for Zavvi and while there are hopes of a reprieve over the Christmas and New Year period it looks like the company will struggle to regain its former position on the high street.

Even though Woolworths went into administration sometime ago we are only now starting to see the knock-on effect to customers, many of whom will be pushed into severe financial difficulties in the short term. It would appear too late in the day for an alternative supplier to step in with such large volumes of merchandise but as Christmas approaches the battle for stock and sales continues.

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