The High Court has appointed an examiner to the Golden Discs music retail group.
Sony Music Entertainment Limited last week secured the appointment of an interim examiner after the High Court was told it was owed €1.38m by Golden Discs.
Sony said it was not prepared to continue to supply the outlets without court protection.
Golden Discs operates 20 retail outlets around Ireland, including six franchised stores. The court heard that six of the stores are loss-making outlets.
It says its current situation is due to a downturn in retail music sales with the onset of Internet downloading, increased competition and the high cost of rents.
Its financial advisor had informed Sony that the group was insolvent and had proposed a voluntary scheme of arrangements for creditors.
The court heard today that the company had a reasonable prospect of survival if certain cost reduction and efficiency programmes were put in place.
They included the achievement of sales levels, reduction in overheads and a renegotiation with landlords along with the scheme of arrangement for creditors. Loss-making stores would have to be closed.
The court also heard that the company - which has been in business since 1968 - was in a cash positive situation and could meet its obligations during the examinership process.
Other creditors in court this morning agreed to the appointment of the examiner.
