Von Essen hid financial woes, says report
Von Essen Hotels attempted to cover up the extent of its financial difficulties when accountants tried to carry out an independent business review (IBN) of the company, three months before the group went into administration.
Ernst & Young, now administrator of Von Essen, was asked to conduct the review after the group first breached its convenants in January, according to a report to creditors as outlined in today's Times.
It is reported that senior management of Von Essen "restricted the IBR team's access to information and personnel". There were no management accounts and the full-year 2010 draft financial statements had not been prepared.
However, despite the lack of co-operation, it was clear that the company could not cover its £295m bank debt, including £42m of interest rate hedges, and subsequently Ernst & Young were called in as administrators on 20 April.
While it is not yet clear how much money is owed to unsecured creditors in total, it is believed the largest arrears relates to a bill for £682,000 owed to the building contractor Chalcroft for a £2.4m building project at Congham Hall in Grimston, Norfolk. The major extension at the 14-bedroom hotel included 11 additional bedrooms, a spa with swimming pool and five treatment rooms, and a new kitchen and restaurant.
Meanwhile, Christie + Co, which is handling the sale of the 27 Von Essen hotels, has confirmed that it has received more than 250 inquiries for both the group as a whole, as well as the individual properties, from hotel groups, private equity firms and high-wealth individuals. The group as a whole is being marketed for more than £200m.
Von Essen falls into administration >>
Von Essen woes highlight struggle of regional hotels >>
Von Essen founder Andrew Davis puts townhouse up for sale >>
By Janet Harmer
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