More details of how a seaside hotel in the North East formerly owned by a high-profile property group went into administration have been made public.
The Sea Hotel in South Shields went into administration on July 18 and the property was put up for sale last month with a £1.65m price tag. The hotel, which is not far from the Sandhaven and Little Haven beaches, has been running as normal while up for sale.
The property was formerly owned by the High Street Group, the development company behind Hadrian’s Tower in Newcastle, which went into administration last year with estimated debts of more than £200m. As well as leading a number of major development projects, High Street Group also ran a number of bars, hotels and restaurants around the North East through its leisure division.
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A report by administrators RSM has now revealed that the Sea Hotel was transferred in December 2020 from High Street Group to the One Collection Group, a company initially run by High Street Group boss Gary Forrest, but which later passed to his daughter and a business associate. The transfer took place for the sum of £1, the report says.
RSM was called in by lender Assetz Capital Trust, and subsequent investigations have found that the hotel incurred losses of £123,000 in the first half of the year, having also been loss making the year before.
The report says: “The hotel incurred losses of approximately £123,000 between January 2022 and June 2022 and losses may persist during the administration period. Operational changes have been made to limit any losses and trading between July and December is expected to be better as it captures the summer months and Christmas period.
“We consider that the company will be able to continue to trade for long enough to give the hotel wide exposure to the market and create the best chance of finding a buyer. To assist with trading, a facility of £75,000 has been secured from Fresh Thinking Partners Limited. This will be repaid as an expense of the administration in accordance with The Insolvency (England and Wales) Rules.
“A small number of redundancies were deemed necessary shortly following appointment in relation to operational changes which could facilitate a reduction in costs. The company has retained a core of staff who are supportive of our strategy and working hard to assist the process.”
The administrators’ report reveals that £1.1m is owed to Assetz Capital Trust, along with £415,000 to HMRC. In all nearly £2m of debts are identified in the administrators’ report, including amounts owed to a number of small North East firms.
Marketing materials for the hotel detail how it includes the Maritime restaurant with a capacity of 60 covers, as well as a Maritime bar with seating for 45. It also includes the Bramall Suite, a self-contained function room licensed to hold wedding ceremonies, the Bar 52 sports bar, oriental restaurant Buddha, a fish and chip takeaway, and a waffle and ice cream kiosk.
The One Collection Group has been approached for comment.
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