The decision, which puts more than 4,000 jobs at risk, comes just days after camera retailer Jessops collapsed with the loss of 1,400 jobs and last year's demise of electrical goods chain Comet. DVD rental company Blockbuster has also called in the administrators.
A statement from HMV, whose first store opened in London in 1921, revealed that it would continue trading while administrators Deloitte looked for a buyer for the business which has been struggling against online retailers such as Amazon and supermarkets.
Fears over the retailer's immediate stability were sparked last week when HMV announced a month-long sale with 25% off prices, which led to speculation that it had experienced a dismal Christmas and was looking to shift more stock.
Vouchers will be valid
Despite HMV's 239 stores in the UK and the Republic of Ireland remaining open, the retailer had said that gift cards would not be accepted but later reversed the decision – they can now be used from Tuesday, January 22. Comet also reversed its decision to stop accepting vouchers after two days,while Blockbuster gift cards were always honoured.
Clare Francis, personal finance expert at MoneySupermarket, said: ""Thankfully it’s now good news from HMV but, as has been recently demonstrated, buying gift vouchers for a firm that then goes bust could leave you in a tricky situation..
"Firms often continue trading even though they're insolvent as the administrators seek to shift unsold stock and it is at their discretion as to whether or not gift vouchers are still accepted."
But there's a way out
However, if you are buying gift vouchers worth at least £100, you can protect yourself – so long as you make the purchase with a credit card.
In this case, you may be able to claim back the money from the credit card provider under Section 75 of the Consumer Credit Act. This makes the card issuer equally liable if something goes wrong, for example, a company goes under or the goods ordered fail to turn up.
But Clare Francis said: "However, there is no guarantee as this is a grey area of the law because strictly speaking you have received the 'goods' you paid for i.e. the voucher. It's worth a try though as it doesn't cost anything to make such a claim."
Please note: Any rates or deals mentioned in this article were available at the time of writing.