Croydon department store, Allders has collapsed into administration.

Geoff Bouchier, Matthew Bond and Philip Duffy of Duff & Phelps have been appointed administrators.

It occupies a 500,000 sq ft store owned by Minerva. Minerva is understood to have been willing to reduce Allders’ rent although Croydon Council was unable to reduce its rates bill any further than it already had done. It did however offer to defer the payment of the rates until January.

Franc Warwick is currently marketing the store for around £50m but Allders’ collapse could affect the sale price. It has a strategic role in the proposed redevelopment of the adjacent Whitgift Centre, over which Hammerson and Westfield are vying.

The store will remain open for business and outstanding customer orders will be fulfilled. The administrators are considering a sale of the business.

Commenting on behalf of Minerva, a spokesperson said: “Since they approached us on 6 June, we have been engaged in a proactive dialogue with both the management and shareholders of Allders in a concerted effort to try and save the business. We responded quickly and constructively to the concession requested. We are very disappointed that, even with our offer to assist, the Board of Allders has been unable to conclude that the business is viable going forward and administrators have therefore been appointed.”

The company’s director, Andrew Mackenzie, said:

“Whilst our funders, shareholders and concession partners have been supportive throughout and the ongoing restructure was progressing, the tough market conditions in the UK retail sector have forced the board to appoint administrators in order to protect the business and its creditors.

“We will now work with the administrator to continue ongoing discussions with funders and other interested parties in the business. With the considerable support already given by Croydon Council and our landlord Minerva, I would hope that additional investment or a sale can be achieved.”

Councillor Mike Fisher, leader of the council, said:

“This is a significant blow to the town and it’s particularly sad that this situation has arisen in the year that Allders has been celebrating 150 years of trading in the borough.

“Like the rest of the country, Croydon is grappling with very difficult economic conditions and reduced spending power, and this shows how even the most long-established institutions are potentially threatened.

“Whilst there is no getting away from the fact that this is a very sad day for Croydon, we remain optimistic for the future of retail in the town. Two of the country’s largest retail developers remain keenly interested in our main shopping centre, Whitgift, and only a few weeks ago we approved Hammerson’s plans for the remodelling and expansion of Centrale. We are determined to ensure that our regeneration plans remain on track.

“And with new residential and business space already under construction, I still believe we are well-positioned for when the economy as a whole begins to grow again.”