The owner of Norwich’s Chapelfield has gone into administration but the receivers have said shopping centres can continue to trade “while the business is assessed.”
The news came after agonising last-minute talks, with the firm trying to secure a standstill loan agreement with £4.5 billion debts.
Trouble had been brewing for Intu before coronavirus struck but three months of no trading and some rents not being paid across the UK meant the firm eventually had to call in the administrators.
Receivers KPMG stated each of the 17 shopping centres operated by Intu, includng Chapelfield were “outside of any insolvency process and continue to trade as normal under the control of their directors.
“Consequently, all of the shopping centres will remain open and operational while the joint administrators assess options for the business and assets of the group.”
David Pike, partner at KPMG and joint administrator, added: “With all centres remaining open, we look forward to working with staff, suppliers and other key stakeholders to preserve value and jobs in these important retail destinations.”
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Norwich retail analyst Joshua Bamford said it was a “major hammer blow to the retail industry”.
Prof Bamford, director of the Centre of Retail Research, said: “Intu has been trying to raise some money for some time, but it’s been like the living dead with Covid and people not paying their rents, but coronavirus has been a really big blow and it will take years to recover from.
“The reality is before the last recession in 2008 everyone wanted to put their shops in malls but things have changed and the shops themselves are not so enticing, people don’t want to go into malls. In the US a quarter of all malls have closed.
“There is no reason why Norwich can’t sustain two malls, it wants to remain the major shopping centre of East Anglia, and it needs good malls to do that.
“But they need to be run successfully. The point of retail and property is that it’s so expensive to run the centres, you’ve got millions tied up in stock and people live on borrowed money, you need to sell and if your sales dry up, the business model fails.
“The local council and the business community need to get together to ensure this doesn’t harm Norwich’s reputation. Investors may take a fright and downgrade all shopping centres which has a knock-on effect and means others which are doing well get a knock back because of a lack of confidence.
“Chapelfield does need to change, it was looking at ways of becoming more leisure focused, and not just be there for the purchase of goods, but coronavirus will have put that back. It needs to expand its eating operation and fill up some of its empty units and square footage.”
Lawyer Kristian Jones, who works for Ashburnam solicitors in Norwich, said it was usual in the case of a shopping centre going into administration that shops could keep trading as they were owned by separate companies. But it would be support services such as cleaning and front of house, which would be run by Intu, that would be affected.
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