Intu Properties has now fallen into administration after failing to secure an agreement with its creditors.

The shopping centre owner - in charge of Lakeside in Essex and the Trafford Centre in Manchester among others - has debts of more than £4.5 billion and has been unable to negotiate a debt repayment holiday before today’s deadline.

Jim Tucker, David Pike and Mike Pink from KPMG have been appointed to handle the process.

Tucker said: “Intu owns many of the UK’s biggest and best-known shopping centres, but the challenges affecting UK retail are well known and have been exacerbated by the impact of COVID-19 and the resulting lockdown - those challenges have fed through to owners of retail property, even to owners of high-quality shopping centres such as Intu’s."

A statement last week explained: “Discussions have continued with the Intu Group’s creditors in relation to the terms of standstill-based agreements. Unfortunately, insufficient alignment and agreement has been achieved on such terms.”

Intu directly employs about 2,500 people and had furloughed around 60 per cent of employees in its shopping centres and 20 per cent of those at its head office.

Any sale will be complicated by the complex structure of the group, so if a buyer for the whole company cannot be found, its assets could end up being sold off separately.

The group was already struggling before the Coronavirus hit, as a result of its debt obligations and the fact that tenants like Debenhams, House of Fraser and Topshop have demanded rent cuts to stay in business.

The news comes as it was reported that UK retailers have paid only 13.8 per cent of the £2.5 billion quarterly rent due this week, according to data from commercial property management platform Re-Leased.

Tom Wallace, the chief executive of Re-Leased, said the shortfall was sobering for the industry. “The June quarter gives us the first real indicator of the severity of the crisis and quantifies the pressure both landlords and tenants are under.”

In April, Intu was preparing to take further action against tenants which have not paid their rent and service charges, despite the challenges retailers have faced during the Coronavirus pandemic. It sent a letter to tenants informing them it would “take robust action where rent and service charge payments, contracted under lease obligations” were not paid.

The following month, Intu appointed David Hargrave as chief restructuring officer - a former partner at both EY and PwC.

In March, the company warned it risked going into administration if it was unable to raise further funds, after reporting losses of £2 billion for 2019, up from £1.17 billion the year before.

Earlier that month, Intu abandoned a potential investment lifeline, as “extreme” market conditions left it unable to raise its minimum target of £1.3 billion.

Brian Burke, director at business advisory firm Quantuma, commented that there's no doubt the pandemic has swiftly intensified Intu's position.

“Having put KPMG on standby earlier this month, it is telling that they are reportedly seeking funding in order to operate the business during administration - the requirement of £12 million is notable given without it they would be unable to operate certain centres, and the approach to bondholders of Metrocentre and Trafford Centre is sensible.

“The strategy, one assumes, will be to trade the business and ensure the centres re-open fully as we exit lockdown," he continued, adding: "This will generate cash and assist to preserve property values, although given the impact upon tenants it is difficult to see how this will look compared to historic performance."

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