Was Bredbury Hall forced into insolvency?

15 October 2014

An interesting report has been released today detailing the circumstances leading up to a business entering insolvency early this year. 

According to the report to creditors, the hotel and nightclub venue was pushed into insolvency when investment firm, Promontoria Holding 87 BV, bought the company’s debt of £11.2 million from Lloyds bank. 

Promontoria immediately decreased the overdraft from £500,000 to £266,767, claiming it would be withdrawn in March this year. Directors failed to secure credit from other lenders and decided to appoint administrators. Once Promontoria found out, they chose to appoint their own administrators from Duff & Phelps. 

Administrators are looking to release assets (approx. £9 million) while the business continues to trade, leaving a £2.3 million shortfall to Promontoria and nothing to unsecured creditors.

Lenders can be aggressive but we don’t know the full story - for example, why did no other lenders wish to take the business debt on?  Also who had the directors brought in as administrators.  It is not unusual for the major secured creditor to appoint their own administrators as is their right.  In the end it looks like they have lost out anyway.  Would the business have succeeded if the actions of Promontoria not been carried out?  We will never know.

However, the withdrawal of any overdraft can be tough on a company that has been used to dipping in and out of a pool of money when they needed it.