The owners of a Brierley Hill shopping centre have put administrators on standby as discussions continue regarding its future.

Intu, Britain's biggest shopping centre-owner, has lined up KPMG to handle an insolvency process if lenders refuse to grant a standstill on its vast debt obligations.

The development, which is understood to have been agreed in the last few days as Intu's board accelerates its contingency planning, underlines the parlous state of the company behind the Merry Hill centre. Manchester's Trafford Centre, the Metrocentre in Gateshead and Lakeside in Essex.

Sources said this weekend that the fate of struggling Intu remained in the balance, although people close to the company expressed "cautious optimism" that its banks would agree to step back from the brink.

Without lenders' agreement, a waiver that expires on 26th June would almost certainly trigger the company's collapse into administration. One banking source warned this weekend, however, that Intu could be declared insolvent within a fortnight if it fails to make sufficient progress in the negotiations with lenders.

That would trigger one of the most complex administrations seen in Britain's property industry for years - and spark fears for a wider commercial real estate sector which has been ravaged by the coronavirus crisis. The company has about £4.5 billion of debt and is one of the London stock market's worst performers, with its shares down almost 90% during the last year.

Intu is an important player in some of the UK's largest regional economies, employing nearly 3,000 people directly - but with a further 102,000 people working in its 17 UK shopping centres. Another 30,000 people work in Intu's broader supply chain.

The COVID-19 pandemic has prompted a vast chunk of Britain's retail industry to withhold rent payments, with big names including the Arcadia Group, Boots, New Look and McDonald's choosing not to pay landlords. This week, Intu published figures showing that a standstill agreement would leave it with enough cash to continue operating, even after a calamitous rent quarter day in March, when it received less than a third of the money it was owed by retail tenants.

Even if the parent company is forced to appoint administrators, because of intu's complex corporate structure, the implications for its individual assets are far from clear. 

Intu Merry Hill was first opened in 1985 by Richardson Developments, as the largest shopping centre in the UK - and one of the largest in Europe. The mall's have had a number of other owners including Chelsfield, Mountleigh and, most recently, Westfield. Merry Hill now takes the title of the UK's eighth biggest shopping centre, with 250 retailers, almost 1.7 million square feet of floor space and 18 million visitors every year.

Merry Hill is also home to the first free-standing Pizza Hut in the UK and the first drive-thru McDonald's, both of which are still in operation on the centre's retail park.

People close to the company believe its lending syndicate is likely to try and avoid forcing it into insolvency because of the potential value destruction that would occur.

Intu declined to comment at the weekend.