High street music retailer Zavvi has denied reports that creditors of Zavvi have brought in an emergency restructuring team from Ernst & Young.

The Times reported that Woolworths' administrator Deloitte had appointed the team as the group's CD and DVD distribution arm Entertainment UK is Zavvi's biggest creditor.

But a statement released by Zavvi read: "Contrary to speculation, zavvi can confirm that its creditors have not appointed Ernst & Young. However, Ernst & Young have been providing invaluable advice and expertise to the group over the past few weeks since Entertainment UK (zavvi’s main supplier) was placed in administration.

"Zavvi would like to reassure customers that it is dealing direct with suppliers to ensure that the right product is available in its 125 stores for Christmas.

"Zavvi is currently reviewing its distribution strategy and will announce plans in the near future. "

The group, which previously traded as Virgin Megastores, has been struggling with supply issues following the demise of Woolworths as it had an exclusive supply agreement to get all of its stock from Entertainment UK.

Zavvi has faced problems stocking its stores since Entertainment UK went into administration last month, and it is no longer accepting orders online.

A message on its website says: "We are currently experiencing supply problems and have temporarily suspended orders until the supply situation is resolved."

It has also cancelled all outstanding orders and refunded customers as it works to find new suppliers.

Zavvi was created last year when Sir Richard Branson sold Virgin Megastores to Zavvi's chief executive Simon Douglas reportedly for £1.

The group employs around 2,500 people in the UK and Ireland. It is thought the Virgin Group could become liable for millions of pounds of debt if Zavvi does go under as it has guaranteed the group's orders with Entertainment UK.

It is understood to have underwritten around 60 days of credit for Zavvi, which ends next month.

Woolworths embarked on a closing-down sale after Deloitte said it had been unable to find a buyer for the group.

Deloitte warned some stores could close before the end of December if no offers for the business emerged, and there are fears some of the group's 30,000 staff will be laid off before Christmas.

The administrator has held talks with individuals including former Woolworths chief executive Sir Geoff Mulcahy and Dragon's Den star Theo Paphitis, but no deals have been struck.

The complexity of the group's leases and difficulty in restocking the business after Christmas has reportedly put off interested parties. But rival retailers, including Tesco, Sainsbury's, Asda and Iceland, are understood to have agreed to buy hundreds of store leases, as many of the group's outlets have planning permission to sell food.