Two former directors of an East Anglia boutique hotel company that has been placed in administration are taking steps to recover the business.
David Toulson-Burke and Jonathan Baker, previously managing director and financial director respectively of the House Collection, are working with lawyers to regain control of the business they launched three years ago.
The company owns and operates two hotels - the 21-bedroom Poet's House in Ely, Cambridgeshire (pictured), and the 15-bedroom Paddock House, near Newmarket.
Accountancy company BDO was appointed as administrator after negotiations between the directors of the House Collection and Eastern Counties Finance (ECF) broke down. ECF, which specialises in providing funding for agricultural businesses, funded the development of the two hotels from their launch.
The intention was to create a portfolio of high quality, individual, small hotels of fewer than 45 bedrooms, where guests would feel they were staying in a personal home, rather than in a hotel.
Toulson-Burke and Baker have now been made redundant, while all the other 72 staff have been retained. BDO has appointed PAT Partners to support the ongoing operation of the two hotels, where it is "business as usual".
In a statement, Toulson-Burke and Baker said that the House Collection had been working with ECF to refinance the business following litigation losses stemming from a dispute with contractors during the renovation of the two properties.
"House Collection has worked continually to reduce debt and bring the business model back in line," they explained. "After being assured of a refinance deal with ECF, House Collection volunteered their business plans and model showing budgeted profits from May 2015."
However, last month ECF offered a refinance package in return for full control of the business, which would have left Toulson-Burke and Baker, previously the majority shareholders, with a minority share and as employees of ECF.
Toulson-Burke and Baker refused and went on to secure funds to refinance the asset and business debt. "Within this new finance model all suppliers were to be paid and the businesses trading in profit as demonstrated to ECF," they said.
ECF rejected the finance proposal from Toulson-Burke and Baker and appointed BDO as administrator.
Toulson-Burke and Baker said they were shocked that that ECF had rejected their proposed financial solution and as a result creditors and staff were now at "significant risk". They are now working with a legal team "to recover their business and carry on the good will and profitable business model that they have spent the last three years creating".
ECF declined to comment.