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Durham County Council was left in the dark about Stack abandoning plans for its long-delayed city venue.
The decision brings an end to a project that has faced years of delays since gaining planning permission and has sparked renewed criticism over the future of one of Durham's most prominent vacant city centre sites.
Council officials indicated they had not been informed before the public announcement, in which Stack said "it is the best interests of both Durham and Whitley Bay to step aside and allow alternative providers to come forward.”
Mark Stamper, Durham County Council's head of place, planning and growth, said: "We have not been notified of any change to Stack's lease arrangements and, as such, would not want to speculate on this matter.
"We remain committed to supporting investment and activity in Durham City Centre, including Silver Street, and will continue to work with relevant partners regarding the future of the site."
Plans to transform the former department store into a multi-level venue featuring bars, street food traders and live entertainment were approved in 2023.
The development proved controversial, with some residents and businesses arguing it was unsuitable for Durham's historic city centre, while supporters said it would help boost footfall and bring a vacant building back into use.
Despite receiving permission, little progress was made on site.
Earlier this year, Stack insisted Durham remained part of its long-term expansion strategy.
In July, the company said both the Durham project and a proposed venue in Bishop Auckland remained important parts of its growth plans.
The Bishop Auckland scheme, on Newgate Street, has also been beset by delays linked to structural concerns involving neighbouring properties.
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“We recognise that there will be a huge amount of disappointment about these decisions,” said Neill Winch, CEO of STACK Leisure.
“And these are not decisions we have taken lightly but we have had to look about where to focus our time, investment and resources.
“Rather than continuing to delay progress on these sites, we believe it is the best interests of both Durham and Whitley Bay to step aside and allow alternative providers to come forward.”