TWO firms that ran a landmark hotel in Huddersfield – but left owing creditors many thousands of pounds – have been wound up.
Now the government’s Insolvency Service is considering further action against directors of the two so-called phoenix companies. This could mean them facing criminal charges or being banned from running any company.
The High Court in London was told that Gemgold Enterprises Ltd and Night Ltd were two of a sequence of companies which operated The Huddersfield Hotel at Kirkgate.
Those businesses have no connection with the present owner and manager of the hotel, who took over the complex last April.
The court heard that Gemgold Enterprises Ltd and Night Ltd together amassed debts totalling £116,000 – almost all owed to local suppliers and contractors.
Before them, the hotel was run by an associated company, Hilldean Consortium Ltd, which bought the complex in August, 2007, but went into compulsory liquidation in June, 2008, owing at least £26,00 to creditors.
Investigators said the pattern of trading was such that each company would run up debts while running the hotel before being abandoned. They left without assets and were replaced by a successor company – preventing creditors from recovering any money owed to them.
Nominee directors were used to mask the true nature of who controlled the firms and funds which should have been received by Gemgold Enterprises Ltd and Night Ltd were diverted into non-company accounts.
The investigators said no accounting records had been kept by Night Ltd while the accounting records kept by Gemgold Enterprises Ltd were inadequate for the purpose of explaining the company’s income and expenditure.
As such, it was not possible to fully establish the losses to creditors.
However, investigations revealed that Night Ltd owed at least £38,000 while Gemgold Enterprises Ltd had liabilities of at least £78,000.
Gemgold Enterprises Ltd was incorporated in April, 2008, with registered offices at Kirkgate. Night Ltd was incorporated in September, 2004, with its registered office at Harley Street, London.
A spokeswoman for the Insolvency Service said: “The people involved in these companies set them up to take money from their creditors and abandoned the companies, leaving them with no assets.
“These are ‘phoenix’ companies, where one firm is allowed to collapse and another company rises from the ashes, but is given a separate legal entity.
“They are designed to make money without paying. It is simple deception.”
She said: “This was a complicated structure set up to make it difficult to see how much money was involved – almost all of it owed to local creditors.
“A clearer picture may emerge as the Official Receiver begins his investigation and talks to creditors now the companies have been wound up.”
The spokeswoman said a decision had yet to be made on whether the directors should face further action, such as banning them from running any business or referring the case to the Serious Fraud Office.
The hotel is now owned independently by Jo-Ann Walker, who took over the business last April.
She has set about restoring the complex – which also includes the Palace Bar, the Cafe Bar restaurant and the Boy and Barrel pub – to its former glory.
Jo-Ann said: “We are a brand new team and we are looking to work with the local community to take this business forward.
“It is an established building in the town with a strong history and we are focused on build it up.”
Since acquiring the business, Jo-Ann, who has 15 years experience in the hospitality sector and now employs 20 people, has joined the Huddersfield Town Centre Partnership and is busy refurbishing the hotel’s 39 rooms.
The Huddersfield Hotel complex was owned and operated for many years by brothers Joe and Johnny Marsden until they sold it in 2003 to hotels group London and Edinburgh and devoted their efforts to the nearby Central Lodge.
London and Edinburgh – by then London and Edinburgh Swallow Group – went into administration in 2006 when the site was part of the group’s Swallow Hotels subsidiary.
The complex was sold again before Hilldean bought the properties in 2007.