Music retailing icons Billy Hyde and Allans are a step closer to closure, as receivers start laying-off staff and clearing instruments.

The two retail brands merged in July 2010 to form Australian Music Group (AMG).

Receiver Ferrier Hodgson was appointed by one of AMG's major creditors on August 23, and set about looking for a buyer for the 24 company-owned stores.

However, despite discussions continuing with several interested parties to conclude a last minute deal that might save the music retailer, the receivers are now preparing the business for closure.

As part of this process, 56 workers have been laid off, mostly from the company's head office in Rowville, Melbourne.

The receivers have also launched a liquidation sale to clear around $45 million worth of stock.

Ferrier Hodgson partner James Stewart says he is very disappointed that Billy Hyde and Allans look likely to close.

"After serving consumers and the music industry for generations, the likely closure of the business and the loss of these jobs is very disappointing for all concerned," he said.

"We will work with the Administrator to enable affected employees to make claims for their entitlements through the Government Entitlements and Redundancy Scheme (GEERS) as quickly as possible."

Before the latest restructure, the receivers say AMG had 608 staff, including 141 in head office.

More than half of the company's staff are located in Victoria.

They add that the three franchise stores are independently owned, and not in danger of closure as part of the receivership.

AMG's stage equipment company Stage Systems is not part of the receivership and will continue to trade normally.