Barclays Sues over Failed Hotels Group
Barclays is suing accountancy firm Grant Thornton for declaring that the chain Von Essen Hotels was in good financial health, just months before the company went into administration in April 2011.
The bank, which helped arrange a £250m loan to the UK luxury hotels chain, has issued a claim for damages it says were caused by Grant Thornton when it signed off Von Essen Hotels’ accounts from 2006 to 2009.
Barclays alleges that the accountancy group acted negligently. The bank teamed with Lloyds to lend £250m to Von Essen, which was earmarked for refurbishments at the group’s listed buildings including Cliveden, a former stately home in Buckinghamshire. The two banks are also owed £42m linked to Von Essen’s interest rate swaps.
The banks forced Von Essen into administration when it failed to keep up the interest payments on the debt, making its founder Andrew Davis one of the most high-profile casualties among that corporate collapses that followed the credit crunch. However, Mr Davis has been able to buy back two sites that formed part of the company’s portfolio of 28 hotels and a London heliport.
Von Essen’s administrator Ernst & Young (EY) was able to return about £100m to the banks. During the administration, EY approached the City of London police to investigate the administration of the firm, although no charges were brought.
The last set of accounts for Von Essen’s parent company, covering 2009 and signed off by Grant Thornton, showed revenues up 6% to £71.5m and operating profits of £11.5m although interest charges resulted in a pre-tax loss of £3.2m.