The group, which trades from 130 stores and employs 2,200 staff, has filed a notice of intention to appoint administrators amid a cash crisis at the firm.
If HMV was to go bust, it would be the second time it has collapsed in recent years, having filed for administration in 2013, after which it was acquired by its current owner, Hilco.
-> In pictures: The Leeds high street stores we have loved and lostKPMG is understood to be waiting in the wings to undertake the process, with an administration set to be announced as early as Friday.
HMV's potential collapse was first reported by Sky News.
High business rates, weak consumer confidence and the rise of online streaming services will have taken their toll on HMV.
The failure of another major high street name before the year is up would cap a miserable 12 months for the retail sector.
The likes of Poundworld, Toys'R'Us and Maplin have all gone bust this year, while heavyweights Marks & Spencer and Debenhams have announced plans to shutter hundreds of stores.
Several others - including Superdry, Carpetright and Card Factory - have all issued profit warnings.
High street retailers have been slashing prices after brutal trading in November and early December failed to lure shoppers to stores.
Traditional retailers have been battling the rise of online shopping, higher costs and low consumer confidence as shoppers rein in spending amid Brexit uncertainty.
KPMG and Hilco, which also owns Homebase, declined to comment.