Bank faces hit after Modus Blackpool collapse

THE Modus company behind the redevelopment of Blackpool’s Houndshill Shopping Centre owed its backer £140m when it went into administration in June.

The debt, owed to Anglo Irish Asset Finance, is secured on the 400,000 sq ft retail scheme, but administrators handling the company said Anglo, “will suffer a shortfall”.

Last month it emerged that Aviva could lose millions on a £143m investment in Wigan’s Grand Arcade shopping centre, another Modus venture.

Houndshill’s owner Modus Corovest (Blackpool), a joint venture between Salford’s Modus Ventures and the property investor Corovest International, owes a further £3.7m to unsecured trade creditors who are not exepcted to receive a return.

In a newly-filed creditors’ report administrators from KPMG said they are aware of further debts totalling £20.3m owed to related party, shareholder and intra-group creditors but they have not been able to verify the figure.

Modus bought Houndshill in 2005 and spent a year extending and revamping the centre. According to the report only 80% of the scheme was let, straining cash flow that was already under pressure from rent free incentives for tenants.

The business was also hit after nine tenants became insolvent and others decided to withold service charges over building and construction issues. Administrators said they were continuing to trade the business and wanted to tackle several issues such as outstanding book debts and incomplete leases before marketing the centre.

The Modus empire began to unravel in March when its £200m Trinity Walk development in Wakefield went into administration.

The Wigan businesses followed and at the end of May Modus Ventures, which controlled a group of more than 40 companies, also went into administration.

Since then administrators have been appointed to handle the affairs of Modus Corovest (Blackpool) and a string of companies that own sites in Rhyl, Congleton, Boston, Preston, Stockport, Bradford, Southport and Wigan.