A Huddersfield-based holiday firm may have owed up to £8.5m to thousands of holidaymakers, villa owners, former employees and investors when it collapsed.

Villa Parade folded on May 14 owing £3.3m to hundreds of customers, a document from liquidators O’Haras shows.

The firm had 1,700 forward bookings and 70 customers abroad at the time.

Villa Parade, formerly based at Highfields, also owed about £3.2m to shareholders, former staff, investors and the taxman.

And Business Resorts, which represents a number of Majorcan villa landlords, has claimed the defunct firm owed its clients €2.5m (£2m) for the 2013 season.

Business Resorts, which trades as Mallorcan Rent Villas, attempted to terminate its contract with Villa Parade in November after what it described as “four very bad years’’ with the company.

A letter from Business Resorts to Villa Parade’s then director Ian Sheekey reads: “The owners have (had) four very bad years with Villa Parade.

“A meeting was called with all owners and they have unanimously agreed to terminate their relationship with Villa Parade and will definitely not sign contracts for 2014.

“It is sad that it has come to this but the last four years have been a nightmare.”

But Villa Parade continued to advertise and book villas managed by Business Resorts.

Months later Business Resorts wrote again to Villa Parade.

The letter said: “As you know, the landlords have refused to enter any new rental contracts with you for the 2014 season.

“Despite this, it is apparent that you have already entered into contract with customers relating to some or all properties at a time when you must have been aware you were unable to provide the accommodation for which you have taken bookings.

“The landlords are extremely concerned at the prospect of your customers arriving at the accommodation for which you have (been) contracted to provide and (are) unable to gain access.”

Rival firm Travelopo, which took over much of Villa Parade’s business in Majorca, has claimed that Villa Parade double booked several villas and quadruple booked another.

Villa Parade continued to reassure customers that their bookings would be honoured until the day before the company was dissolved by liquidators.

After its collapse, Villa Parade claimed it had been “fatally wounded” when Travelopo contacted Villa Parade customers in April telling them that their bookings would not be honoured.

Villa Parade, which obtained a court injunction ordering Travelopo to retract its statement, blamed the Somerset-based rival for poaching its customers.

The injunction has since been overturned.

Villa Parade was under investigation by travel watchdog Abta but it was discontinued when the company folded.

Abta has confirmed it will pay £1m in compensation to former Villa Parade customers.

Attempts by the Examiner to contact Villa Parade directors have been unsuccessful.