The owner of New Zealand's biggest specialist chain Sounds Music has gone into voluntary administration.

After months of industry speculation about the fate of the group, BDO Spicers have today been appointed administrator of Icon Digital Entertainment, the company which bought the music chain last year.

BDO Spicers declined to comment on the state of Icon's finances. But in a High Court judgement delivered in Auckland on Monday, it was revealed that Icon owes NZ$13 million ($9.8 million) to the bank Westpac under a general security agreement. A further 125 creditors are owed NZ$5.92 million ($4.4 million) and according to the documents, "Icon is or may be insolvent".

Icon was set up by Steve Dods, who is also master franchisee for Blockbuster in New Zealand. The move into administration relates to the 37-strong Sounds group and four Games Plus stores, along with seven Icon-owned Blockbuster outlets.

However, the administrators stress the situation does not affect the remainder of the 32 Blockbuster franchise stores in New Zealand, which are operated through a separate company.

Dods cites the soft retail market in general, plus the impact of illegal downloads and piracy as reasons for Sounds' financial difficulties. "This move by the company allows us time and space to look at all future opportunities for our key retail brands," he adds.

No details were given about the company's financial situation, but Sounds is believed to have been struggling for much of the year. It is understood that Icon's financial problems began at the end of 2006, when promised funds from a key investor did not materialise.

Under New Zealand's new voluntary administration legislation -- which came into force this at the beginning of November -- companies are given the opportunity to restructure and consider all future options for the business without pressures from creditors.

Stephen Tubbs of BDO Spicers says that whilst the legislation is new to New Zealand, similar legislation has existed for some time in other countries. "It is particularly suitable for companies like this to continue trading while the company considers its future options," he says.

The first duty of the administrator will be to examine the company's affairs and determine whether it's in the creditors interests for the company to keep trading. The first creditors' meeting has been set for Nov. 30.