The backup fails and upon investigation within the VM's Application Event log, you'll see the following error:
Source: vmicvss | Event ID: 2
The VSS writer MSMQ Writer (MSMQ) failed with status 8 and writer specific failure code 0x800423F2.
Permission issue on the "System32\MSMQ" folder and sub-folders.
In this case to resolve this issue ensure that the Administrator and the Local System account have full permissions applied on the "System32\MSMQ" folder and all of its subfolders. Not having these permissions assigned will result in VSS issues and hence backup failures.