Nearly 90 companies who supplied goods and services to the company building the Hilton Hotel at Peterborough – now 5 years later opening – stand to lose around £6.3m. Teneo, the joint administrators of Fletton Quays Hotel Ltd, said it had received 26 claims to date from unsecured creditors totalling £4m.
“But the directors statement of affairs shows 88 unsecured creditors with estimated non preferential claims totalling around £6.3m,” says Teneo.
“On present information, it is unlikely that sufficient funds will be realised to enable a distribution to be made to unsecured creditors.
Kitchen, bedroom, catering, interior design, furniture, and bathroom suppliers feature on the list of company creditors.
Ahead of the queue expecting to be repaid, however, is Peterborough City Council who hold a first-ranking fixed charge over the Hilton and a first ranking floating charge over all other assets of Fletton Quays Hotel Ltd.
At the time of the administration this amounted to around £17m
The council is holding a special Cabinet meeting on May 30 to consider a credit bid – effectively swapping its £15m loan to acquire the stalled hotel.
It could spend a further £10m to complete it.
Teneo’s latest report shows the city council has provided an extra £300,000 to secure the site but mainly to fund insolvency, legal and professional costs.
The administrator added that that materials to support completion of the Fletton Quays hotel, are “secured at a third-party site”. A previous report by Teneo estimated these to be worth up to £500,000.
However, a second player to have a say in the future of the Hilton is Propiteer, who set up Fletton Quays Hotel Ltd but remains a secured creditor through its inter related Propiteer Collateral Manager Ltd PCML), acting as security agent for Propiteer Capital plc (PCPLC).
PCML, says Teneo, holds a second ranking fixed charge over the Hilton and a second ranking floating charge over the assets. PCPLC was owed £10m at the time of the administration.
“Recoveries to the company’s secured creditors will depend on recoveries from the sale of the property and the level of floating charges – both of which are currently uncertain,” says the Teneo report.
Determining the stance to be taken by the city council over its financial exposure to the Hilton debacle will be the first major challenge for the new Labour led city council.
Council leader Dennis Jones said: “This situation is one which we wish could have been avoided and it is most likely the hotel would now be open if it had not been for the Covid pandemic.
“Owning the hotel will allow us to see the development through to completion and benefit from the return of our loan and a fantastic new hotel facility for Peterborough.
“The alternative is that we walk away and lose most of, if not all of our investment.”
Not yet decided, of course, is whether the completed hotel will be run by the Hilton group although, bizarrely, it continues to marketed – with some websites even suggesting it is already up and running.
Cllr Jones will chair a special meeting of his new Cabinet on May 30 with the only item up for discussion – and decision – will be the future of the Hilton site.
Recommendations will include submitting a credit bid to take the hotel out of administration and to reject a third party bid to buy it.
The Cabinet, meeting behind closed doors, will also be recommended to allow senior officers to “take all necessary steps” to move ahead with the council’s acquisition of the hotel.
If agreed Cabinet will meet again in July to consider a full business case to cement the council’s preferred option. These could, of course, provide for the city council to complete the hotel itself or take ownership and then either complete it or sell it as it now is.
The council’s decision will depend on many factors, not least the cost of completing the hotel.
Teneo has instructed specialist surveyors Quartz Project Services Ltd “to assess the costs to complete construction of the property”.
Cllr Jones added: “Having a Hilton hotel in the city would be a huge asset and therefore I am pleased that Hilton remains committed to the development and to Peterborough.
“We are working closely with Hilton and other partners as we plan the next stages.”
FACT FILE
In September 2017 the city council approve “a facility” of £15m for 24 months to provide funding for the construction of a Hotel on the Fletton Quays site by Norlin Hotels Holdings Limited and its subsidiary Fletton Quays Hotel Limited.
The city council heard that the Hilton project was for the development of a 160 bedroom hotel by Norlin Hotels Holdings Limited and will be run under a franchise agreement with a well-known national, prestigious hotel chain.
Works were expected to commence in February 2018 and the hotel to be operational by the beginning of July 2019.
