Zavvi struggles in wake of Woolworths collapse

Zavvi is undergoing emergency reconstruction in the fallout from the collapse of Woolworths, according to a report.

According to the Times, Woolworths administrators Deloitte have asked Ernst & Young to help Zavvi, which is struggling since losing its major supplier EUK in the wake of the Woolworths failure.

Woolworths' entertainment distribution arm EUK also went into administration when the retailer collapsed, leaving Zavvi short of stock and forcing the firm to temporarily suspend online sales.

Zavvi, formerly Virgin Megastores, owes EUK £106 million and Ernst & Young is said to be ready to step in as administrator if the firm cannot repay its debt.

It is understood that Tesco and J Sainsbury also owe EUK about £25 million each.

Today, Zavvi's website still displays the message: "We are currently experiencing supply problems, and have temporarily suspended online orders until the supply situation has resolved."

The chain, sold by Sir Richard Branson to Zavvi's management team for £1, employs 2,500 people.