Administrators of developer behind Peterborough's Hilton Garden Inn warn creditors unlikely to be repaid in full

Peterborough City Council officials have re-emphasised their confidence that the partially built Hilton Garden Inn will be completed ensuring a £15 million loan from the local authority is not lost.

The assurance comes in the wake of a new report from the administrators of the hotel developer, Fletton Quays Hotel, which includes figures from the builder’s directors estimating that the amount of money that could currently be realised from the nine storey building is just £6.5 million.

The details are contained in a statement of ‘proposals’ from the administrators Teneo for dealing with the collapse of Fletton Quays Hotel and repaying its creditors.

It states that the primary or ‘secured creditors’ are the council, which is owed about £16,540,740 million, which is the £15 million loan plus interest, and Propiteer Collateral Manager Ltd (PCML), which is owed £10 million.

The administrators state that any repayments to both will depend on how much is recovered from the sale of the property.

But they warn: “Based on currently available information, we do not expect there will be sufficient asset realisations to repay both the first and second secured creditors in full.”

The report also reveals that a further £6.3 million is owed to 88 unsecured creditors, which includes a number of Peterborough companies, plus £65,000 owed to HMRC.

It adds: “It is unlikely that sufficient funds will be realised to enable a distribution to be made to unsecured creditors.”

However, the administrators state that they have employed experts at surveyors Quartz Project Services to assess the value of the hotel and the costs involved to complete it. The valuation is expected in January or February 2024.

Building work on the 160-bedroom Hilton Garden Inn, which sits on the banks of the River Nene at Fletton Quays, began in May 2020 with civic and business leaders even attending a ‘topping out’ ceremony in April 2022 where Steve Cassidy, managing director, UK and Ireland, Hilton, told guests he looked forward to the hotel opening in January 2023.

The administrators’ report reveals that just three months later the development ran into trouble when Fletton Quays Hotels’ initial contractor, which was engaged on a fixed price basis, went into liquidation in June 2022.

The loss of that fixed price contract plus rising inflation meant building costs soared and by March this year Fletton Quays Hotel had run out of cash and all construction work had stopped.

There followed numerous discussions with potential new investors but all the talks failed, says the administrators’ report, and the site ‘remained dormant’ from March.

It led to Fletton Quays Hotel being put into administration by the council in October this year.

A council spokesperson said that despite the report, the local authority was confident the hotel would be completed.

She said: “The council's loan remains secured against the hotel development and professional valuations have been completed to confirm this at each stage when funds have been agreed.

"At this stage we consider that we have adequate security in the asset to cover the value of the loan.

"The council's main priority remains to protect its investment and ensure the Hilton Hotel is completed as soon as possible.”