The details surrounding the fall into administration of a pubs and hotels group with debts of almost £2m have been revealed for the first time.
Patrick Lannagan and Julien Irving of Mazars LLP were appointed as joint administrators to Lancashire-based Provincial Hotels & Inns in June.
The company, which was founded in 2013 but dormant until 2016, is based near Carnforth and owned four public houses and a hotel.
- The County Lodge & Brasserie, Carnforth
- The Blue Anchor, Bolton-le-Sands
- The Manor Inn, Lancaster
- Yorkshire House Hotel, Lancaster
- The Windmill Tavern, Clifton, near Preston
A document submitted to Companies House by the joint administrators said: “It was apparent from the financial review conducted by Mazars LLP, following engagement by the company in February 2021, that there was no reasonable prospect of rescuing the company as a going concern in view of the level of secured debt and the impediments to restructuring this debt and rationalising the property portfolio.”
In June 2016 the company acquired a portfolio of nine pubs and two hotels from Mitchell’s of Lancaster (brewers) Ltd, funding by a first ranking secured loan from HSBC and a second from a private investor.
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Mazars said: “The directors advise that the acquired estate was making a small profit but the property portfolio needed significant investment to improve business performance.
“The directors agreed a business plan to turn the business around which involved the immediate disposal of two o the property assets (assessed by the directors as non-essential to the performance of the portfolio) in order to release funding to enhance the rest of the estate to a modernised combination of tenanted and managed hospitality venues, to repay some of the secured borrowing and to free up some additional working capital for the business if possible.
“The initial sales were not concluded as soon as anticipated as it was discovered the fabric of the property portfolio was in a poorer condition than the pre-acquisition property surveys had suggested, requiring additional capital expenditure on improvements and the sale of further properties to fund the capital expenditure.
“As a consequence of the changes to the business turnaround plan, the company’s cash flow position was lower than originally forecast.
“Accordingly, the directors sought to agree an interest repayment holiday in relation to the second ranking secured debt.”
The company then disposed of non-profitable properties from its portfolio, raising funds of more than £1m in 2018 and almost £500,000 in 2019.
The net proceeds of the sales were used for capital improvements, working capital and a reduction of the company’s senior secured debt owed to HSBC.
Mazars added: “The global outbreak of the Covid-19 pandemic placed great trading difficulties on the UK hospitality industry, resulting in the company closing all of its remaining venues in accordance with the UK Government-imposed restrictions.”
The venues remained closed throughout 2020 and 28 company staff were placed on furlough.
The company re-opened the Blue Anchor and The County Lodge in April 2021, with the tenant at the Manor Inn also taking over a tenancy at the Windmill Tavern. The Yorkshire House remained closed.
The Mazars document confirms that HSBC is owed almost £1.6m as a secured creditor while HMRC is owed £144,312.
There is also estimated to be 48 trade and expense creditors with unsecured claims in the region of £126,148.