The administrator to HMV yesterday performed a major U-turn and said the failed retailer's gift cards could be redeemed in stores from tomorrow, as hopes were raised that the chain's 200-plus stores could remain on the high street in the short-term.

Deloitte is locked in talks with Hilco, the restructuring firm, about striking an unusual deal that would see it assist the administrators in running the UK retailer, while the accountants seek to complete a formal sale of HMV.

Denby Pottery owner Hilco, which acquired HMV Canada in 2011, also remains the front runner to acquire the UK chain. Its bid is apparently backed by a consortium of music and film giants, such as Warner Music and Sony Pictures, among others.

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In a traumatic fortnight for the high street, the collapse of HMV last week was closely followed by the administration of the DVD rental firm Blockbuster, which already plans to shut 160 of its 528 shops.

Deloitte caused anger among shoppers by not honouring HMV's gift cards. At the time, Dean Dunham, the founder of youandyourrights.co.uk, said: "We've got to see some changes in this area. It's almost theft." He added: "A gift voucher should be as good as a banker's draft."

In an apparent response to the backlash, Deloitte yesterday said that all holders of HMV's gift cards will be able to cash them in at its stores from this morning. There are estimated to be up to £7m-worth of gift cards outstanding.

The accountancy firm also said proceeds raised by HMV through the sale of charity releases, including the Hillsborough Justice Collective single, will be paid "in full" as soon as possible.

Nick Edwards, the joint administrator, said: "We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome."

HMV had kept accepting gift cards up until the afternoon of 14 January, the day before it formally fell into administration. While it is standard practice for administrators not to honour gift cards, Deloitte performed a similar U-turn following the collapse of the 236-store electricals chain Comet before Christmas. The accountancy firm explained that it had been "urgently" assessing the financial position of HMV, such as the value of outstanding gift cards.

Hilco, which declined to comment, remains in talks with Deloitte to hammer out a full-blown rescue deal for the retailer.

However, any such deal will be complex due to the large supplier base, HMV's debts of £176.1m and the fact it has a substantial number of loss-making stores. The eventual closure of some stores is inevitable.

The private-equity companies, Endless and Better Capital, and the restructuring company Gordon Brothers also remain interested in acquiring parts of HMV. The video games retailer Game, which is owned by distressed investor OpCapita, is looking at up to 45 stores.

Meanwhile, as many as 388 jobs could be lost after the Midlands Co-operative yesterday said it was closing nine of its department stores.