The music and DVD retailer is the latest high-profile name to fall on the British High Street, putting around 4,350 jobs at risk.
Analysts feel that HMV has been too slow to adapt its business to the shift to online retailing and digital downloads.
Administrator Deloitte is to keep HMV's 239 stores in the UK and Ireland open while it assesses future options for the business, including seeking potential buyers.
Despite the shops remaining open, the troubled group warned shoppers that it will not accept gift cards/vouchers or issue them. HMV also said that it will not accept returned goods, unless they are faulty.
"Where we have statutory obligations we will honour them, but when it's a discretionary thing such as an exchange or return it is unlikely that shoppers will be successful," a HMV spokesman said in a statement.
"We effectively have different owners now, and it is up to them to decide how gift vouchers are treated, but there will be a process for voucher holders to follow and the administrator will be able to offer more information on this."
HMV today suspended trading in ordinary shares on the London Stock Exchange and said that "current market trading conditions" meant that it would not be able to meet its banking commitments by the end of January.
The company's board said that despite discussions with key stakeholders and the banks, it has been "unable to reach a position where it feels able to continue to trade outside of insolvency protection", and so has decided to appoint administrators.
"The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business," the firm said.
Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will act as the administrators of HMV and certain of its subsidiaries.
HMV has been in crisis for around three years but on December 13, 2012, the firm warned that it faced a possible breach of its bank loan agreements in early 2013, causing its share price to collapse.
Trevor Moore joined the company last year as chief executive from photography retailer Jessops, which closed down this month.
HMV, which started trading on London's Oxford Street in 1921, has struggled to adapt its business against the rise of online retailing, digital downloads, and competition from the likes of Amazon and the supermarkets.
The firm has already sold off many parts of its business, including the live entertainment arm and Waterstones book retailer.
But Gregory Mead, the chief executive of global music analysts Musicmetric, said that HMV had been slow to respond to the "digital revolution".
He said that the appointment of administrators was a "sad but inevitable fate for a much-loved stalwart of the music industry".
"Where retailers like John Lewis have embraced the internet - building customers through its Click and Collect service - HMV simply failed to adapt to the changing tastes of music fans and the seismic shift we've seen as everything has gone digital," he said.
"While figures from the 2012 Digital Music Index showed file-sharing to be rife right across the UK, the upshot of this is that there are millions of fans accessing music each day.
"The challenge for retailers like HMV has been to find ways to tap into this - but you'd be hard pressed to be able to walk into an HMV store and buy songs directly on to your iPod."
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