Zavvi, which previously traded as Virgin Megastores, boasts some 125 stores across the UK. It has used EUK both as a distributor and its buying team and has been unable to fully stock its stores since EUK went into administration.
With Ernst & Young in place, EUK is aiming to claim back the £106m that Zavvi owes the distributor. However, according to The Tmes, Ernst & Young will become the administrator at the entertainment retailer if it fails to pay back its debt.
The Times also reveals that Zavvi is just one of a number of major customers that owes money to EUK, claiming that both Tesco and Sainsbury's owes around £25 million each.
A statement from Zavvi is expected shortly.
Source: The Times