Britain's second-largest supermarket chain Asda is in talks to rescue collapsed entertainment retailer HMV, according to reports Tuesday.

HMV went bust in January after failing to keep up with online competition.

Now Asda is understood to have approached HMV's administrators Deloitte about possibly buying the business.

"Asda has been looking at HMV and it's not about taking on a few stores to convert into supermarkets. They've been looking at taking on the brand — the business," a source told UK newspaper The Sun.

The news comes after restructuring specialist Hilco bought HMV's debt, taking effective control of the business and putting it in prime position to acquire the troubled retailer.

Hilco, which owns HMV Canada, is expected to go toe to toe in a bid to snap up the company.

Asda and Deloitte declined to comment.

The 92-year-old chain is set to close more than 100 stores, leaving the company with a residual portfolio of 116 shops.

The company's flagship Oxford Street store has so far survived the closure while all four Heathrow airport sites were to shut. The total number of redundancies is close to 1,500 - almost half the workforce.

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