Administrators 'not in position to complete' George Best Hotel
THE administrators of the former George Best Hotel in Belfast have announced they are not in a position to complete the controversial hospitality venture.
Launched by Liverpool developer Lawrence Kenwright’s Signature Living in 2017, the 59-bedroom project collapsed in April 2020 when finance firm Lyell Trading, concerned over a £7.2 million debt, appointed Duff & Phelps to Bedford Hotel Ltd, the trading name for the former Scottish Mutual Building.
The process uncovered £12.2m owed to unsecured creditors, including £4m to so-called ‘bedroom investors’, who effectively bought shares in the hotel through a scheme to invest in individual rooms.
Around £4.76m is now thought to be owed to the bedroom investors.
The administrators initially explored completing and opening the hotel as the best way to increase the value of the asset, and recover the loan.
But a new report from Duff & Phelps said that goal “cannot be achieved as it is not currently financially viable for the joint administrators to progress the hotel development to completion and subsequently commence trading”.
It makes a sell-off of the building increasingly more likely.
A progress report by the administrators, published on Companies House this week said: “Analysis was undertaken to understand the costs and funding requirement to complete the development, as well as the outstanding indebtedness with the secured creditor, which has led to the determination that the joint administrators are not currently in a position to raise the required finance to complete the construction.”
The administrators said they anticipate “a distribution” will be made to one or more secured creditors “via the realisation of the hotel”. In other words, converting the asset to cash.
However, that outcome would likely leave the unsecured creditors with nothing.
Court proceedings are currently ongoing to ascertain where the bedroom investors would stand in relation to Lyell Trading, as the secured creditor, in the event of a sale.
In July, the UK Accommodation Group (UKAG), a company with links to Mr Kenwright, announced it had the support of a 50-strong group of bedroom investors as part of a bid to refinance and complete the project.
UKAG, chaired by Tyrone businessman Thomas Scullion, is involved with a number of similar company voluntary arrangement (CVA) proposals for former Signature Living projects in England.
It said a subsidiary company, chaired by Co Antrim businessman Stephen Kearney, would have Lawrence Kenwright as its chief executive.
Duff & Phelps’ report states that 51 out of 57 agreements in respect of the bedroom investments have now been assigned to UKAG.
The case is due back in front of the High Court in Belfast on December 3 2021.