Retailer failed to agree refinancing terms on £220m bank debt over the weekend
Hundreds of Scottish jobs are now under threat after media retailer HMV called in administrators.
The 91-year-old chain, which has 22 stores in Scotland in a stable of 238 stores across the UK and Ireland and employs 4,350 people in total - intends to appoint Deloitte as administrator today.
Deloitte said HMV stores will remain open while it attempts to find a buyer for the stricken retailer, though widespread store closures are expected.
Shares in HMV have been suspended with immediate effect.
Stores remain open and are trading but the retailer said it would not be accepting or issuing any more gift vouchers.
HMV was forced to call in administrators after failing to convince its suppliers – including Universal Music, which came to its rescue in January 2011 – with a financing deal to reduce its £220 million bank debt.
The retailer also failed to strike an agreement on new financing terms with its lenders over the weekend.
The Financial Times reports suppliers turned down a request from HMV for £300 million in additional financing, which it planned to use to pay down debt and finance a restructuring of the business.
Suppliers were reported to have provided around £40 million of support to HMV in the run up to Christmas.
The retailer was due to publish its Christmas trading update this week, which the retailer admitted on Monday evening had been “slightly behind expectations”.
Its most recent trading update for the first half revealed a 10 per cent drop in like-for-like sales and a loss of £36.1 million.
Neil Saunders, managing director of retail consultancy Conlumino, said the collapse of HMV was inevitable.
He added: "While many failures of recent times have been, at least in part, driven by the economy, HMV's demise is a structural failure.
"In the digital era where 73.4 per cent of music and film are downloaded or bought online, HMV's business model has simply become increasingly irrelevant and unsustainable."
Last year HMV offloaded its Waterstones bookstore chain for £53 million and music venue the Hammersmith Apollo in a £32 million deal.
HMV is the latest in a string of high street casualties in recent weeks, with Jessops and Comet both collapsing with a combined loss of more than 8,000 jobs.