The founder of music retail chain Music Zone, who sold the firm two years ago, has said it was a "huge shock" to hear last week that the company had now called in the administrators. As those administrators placed an ad in the Financial Times yesterday confirming the music chain was up for sale, the Manchester Evening News reported that founder Russ Grainger is blaming the company's financial backers, private equity house Lloyds TSB Development Capital and the Bank Of Ireland, for the sudden financial strife, claiming they have backed out of their commitments to MusicZone because of problems being experienced by other players in the music retail space.
The MEN quotes Grainger thus: "In business you have to take a risk, but in this case I think we saw risk-free banking. I think Music Zone has gone to the wall, in a perverse kind of way, because of the troubles of its competitors, HMV and Woolworth's. Bank of Ireland lost its nerve and called in a loan, and I think Lloyds TSB could have done more to refinance the business: they are a bank, after all. OK, the market was tough, everyone knows that, but there was nothing terrible about the trading pattern."
While no longer involved in the retail chain, which he grew from a Manchester market stall, Grainger says that if the company goes to the wall he will lose out financially because when he sold the company there was a clause that would ensure him a cut of any future sale of the chain. Moreover, he says he is concerned for the company's 1100 staff, many of whom he still knows: "I have a lot of friends there - people like [Managing Director] Steve Oliver, who is a family friend - and I am very upset for them".