The music and movie chain has been offered a lifeline by banks including the Royal Bank of Scotland and Lloyds Banking Group, however analysts and insolvency practitioners believe the agreement may make turning a profit extremely difficult for the retailer.
Harsh borrowing conditions will mean the interest rate on the company's loans rises 1.5 per centage points to four per cent above Libor.
Furthermore, the banks will receive warrants that transform into shares worth five per cent of the business in a year's time.
Perhaps most challenging for HMV will be the ratcheted rate it will pay on the largest chunk of its borrowing, which could see the retailer's interest rates rise from five per cent to as much as 14 per cent if it fails to repay its lenders before a fixed date.
HMV boss Simon Fox said that going forward the company would focus on making the high street stores more attractive to consumers and that the business would look to expand its online and digital presence as well.