Dream Lodge, which operates holiday parks across East Anglia and other areas has gone into administration. The operator parks were based in Lazy Otter Meadows in Ely, Blosson Hill Park in Devon, The Sanctuary in Berkshire and Woodlands Park in East Sussex.
In a statement the partners at Deloitte, Richard Hawes and Rob Harding said that The Dream Lodge Group was impacted by a “period of financial pressure”.
It added: “Given the immediate funding constraints and seasonality of the business, it has been necessary to make 80 out of the 121 employees redundant, with immediate effect.”
The holiday parks were more luxurious than most and promised, Hot Spas, walk in wardrobes, heated swimming pools etc. Investors were encouraged by being promised access to the lodges and a guaranteed rental return. Things started to go awry when payments to investors didn’t arrive. Lodges were available for investments between £50k and £150k.
Unfortunately, these investors are unlikely to recoup much money as they are in effect unsecured. Lenders will have security and are more likely to get something back on the sale of the park’s assets.
Readers Guide To the Administration Process
As Dreamlodge has entered formal insolvency, stakeholders often face significant uncertainty. Here is a breakdown of the legal framework and what it means for those affected.
1. What is a “Basic” Administration?
Administration is a powerful statutory process governed by the Insolvency Act 1986. It is triggered when a company is insolvent and can no longer meet its debts. An independent Licensed Insolvency Practitioner (IP) is appointed to take control from the directors. A key feature is the statutory moratorium—a legal “shield” that instantly stops all legal actions, such as winding-up petitions or bailiff visits, providing the “breathing space” needed to rescue the business or achieve a better result for creditors than immediate closure.
2. Who Gets Paid First?
The law dictates a strict hierarchy for the distribution of funds. Fixed charge holders (typically banks with security over property) are paid first. Once the administrator’s fees are covered, preferential creditors are next; this includes employees (for specific arrears) and HMRC for taxes like VAT and PAYE. Following these are floating charge holders, and finally, unsecured creditors—which include trade suppliers and customers—who are at the back of the queue and frequently receive only a small fraction of their debt.
3. What Happens to Employees?
Entering administration does not mean all jobs are instantly lost. For the first 14 days, the administrator assesses the company’s viability and may make redundancies. If a member of staff is kept on past this 14-day window, the administrator “adopts” their contract, meaning their ongoing wages and rights become a priority expense. Those made redundant can claim for unpaid wages and notice pay via the Redundancy Payments Service if the company has insufficient assets to cover these costs.
4. What About Suppliers and Customers?
Suppliers and customers are generally unsecured creditors. Suppliers should stop granting credit under old agreements and negotiate “pro-forma” (upfront) terms for any new supply to the administrator. For customers, deposits and gift cards are rarely honoured. However, those who paid over £100 via credit card may be protected under Section 75 of the Consumer Credit Act and should contact their bank immediately to initiate a claim.
