Shopping centre giant intu has reportedly put administrators on standby as part of fresh contingency plans, according to national reports.
Intu, which owns the Victoria Centre and is currently at the helm of the Broadmarsh redevelopment, has appointed KPMG to handle the insolvency process if bank talks fail, reports the Newcastle Chronicle and Sky News.
The company, which employs around 2,000 people, will be engaging in critical talks in regards to its vast £4.5billion debt.
These talks will determine what happens after the coronavirus pandemic and come after bank lenders agreed a loan waiver on its debts, which expires on June 26.
Just last week, retail and commercial property experts in Nottingham raised serious concerns for the future of the intu Broadmarsh redevelopment after work remained halted despite Government advice.
All work on the new shopping centre - which is arguably the centrepiece of the city's southside redevelopment - ceased on March 23.
More than two months later and despite advice from the Government to resume work, contractor Sir Robert McAlpine still awaits instructions from intu as to when to resume.
Intu was already facing significant financial difficulties before the pandemic, reporting losses of £2 billion, and warned it would likely default on some debts if lenders were not able to give them more flexibility.
A month after work ceased at the end of March, intu then brought in a new restructuring boss.
Intu's boss Matthew Roberts is now seeking a wider 18-month standstill to repair the company’s balance sheet and avoid triggering a raft of repayments to banks and bondholders.
If this happened, administration would likely be certain.
Despite the reports of KPMG's appointment, sources close to the company are thought to have expressed "cautious optimism" that its banks would agree to step back from the brink.
If the company did enter administration, it would be one of the most complex in recent times, due to its 20 shopping centre assets owned by separate special purpose vehicles, against which the listed parent company borrows money to fund its operations.
In Nottingham, the city council is the freeholder of the Broadmarsh shopping centre and receives one-third of the income for its tenant, intu.
It has been attempting to push for its redevelopment for almost two decades.
Experts such as Tim Garrett, managing director at commercial property consultancy Innes England, previously said the council should take over the site amid intu's struggles.
Intu is one of the London stock market's worst performers, with its shares down almost 90% during the last year.
This week, Intu published figures showing that a standstill agreement would leave it with enough cash to continue operating.
This came despite a terrible rent quarter day in March, when it received less than a third of the money it was owed by retail tenants due to the pandemic and struggling retail sector.
Intu and KPMG have been contacted for comment.
