The company which ran the Fleece Hotel is set to be liquidated with debts of more than £230,000.
Creditors have received documents stating that it is proposed Best Friend Limited, the trading name for the Richmond hotel, is to be placed in a creditors’ voluntary liquidation.
The papers reveal that there are 71 creditors, including members of staff, suppliers, directors and others, who are owed a total of £239,812.
The company had £6,455 in the bank when it stopped trading. It also had debtors of £5,888 and fixtures and fittings valued at £143,193.88.
However, the proposed liquidator, Gareth Lewis, from Lewis Business Recovery and Insolvency, said it was uncertain how much of the money from the fixtures and fittings and debtors would be realised, and the estimated total shortfall was £233,457.
The documents also show the company made a loss from September 1 2017 to December 20 2018 of almost £50,000.
Among the creditors owed money by the hotel are Best Friend Limited directors Peter Coulson and David Colley, who are owed £74,000, HMRC, which is owed £18,238, and Richmondshire District Council, which is owed £6,107.
Another major creditor is Within Reach Developments, the company which redeveloped the building, and leased it to the hotel. The company, which has the same two directors as the hotel, is owed £60,000. Within Reach has gone into administration.
Numerous local companies which supplied and provided services to the hotel are also owed money, including cleaning companies, food and drink suppliers, agency staff suppliers, technology companies, local pubs and guest houses.
The hotel opened in May 2018.
A trading history of the company including with the papers states that the hotel rooms were received well and trading grew over the first six months, with the hotel almost breaking even by November.
The documents says the pricing and style of food was changed after customer feedback, which resulted in the departure of the general manager, head chef and sous chef.
The report says the hotel employed a hotel consultant and in consultation with the consultant, they agreed “a number of contracts and purchases which on reflection stretched the company’s cash flow from the start, be this in monthly lease commitments or one-off purchases inappropriate for a business of this size”.
The business was put up for sale in November for £1.25m and the directors looked for investors, however the papers say that uncertainty over Brexit meant investors wanted to wait until the New Year to see the direction of the country and property prices before committing.
The directors put in a loan on December 7, which was used to pay staff wages.
However, on December 12 Within Reach Limited entered into administration which meant the tenancy was terminated and the company could not continue trading.
The report states that the directors believe there are several reasons why the business failed, including the uncertainty in the property market caused by Brexit, and the company being set up with higher debts through loan agreements and long term contracts with suppliers than was appropriate.
The other two reasons were the change in senior staff due to the change in direction of the food offering which resulted in a reliance on kitchen staff at a higher cost and a serious illness suffered by one of the directors which reduced their ability to support the business.
