Debt Restructuring – Scottish Hotel

Stewart Hindley & Partners has been successful in securing a consensual agreement on behalf of its client, a Scottish Hotelier and a leading Insolvency Litigation Financing Company, who purchased our client’s debt from one of the “Big Four” Insolvency Practitioners.

This consensual agreement not only allowed the Hotelier to remain trading, but it also significantly reduced the sum claimed by 85%, which is testament to the way Stewart Hindley & Partners deal with Litigation Financing Companies, often in very stressful and demanding situations.

Chris McDonagh, Head of Debt Restructuring and Advisory, commented:

‘This is a first for Stewart Hindley & Partners as ordinarily we work with the UK’s leading banks securing consensual outcomes and debt restructuring solutions for our clients.

However, dealing with an Insolvency Litigation Financing Company was certainly a completely different dynamic and an extremely challenging one, so we’re absolutely delighted that we achieved the right outcome for our client.’

Get in touch with us today on 01488 684834 for more information on how Stewart Hindley & Partners can assist you or your firm with commercial debt restructuring and action from Litigation Financing Companies.


South Yorkshire Hotel – Loan Restructuring

Loan facility review

A South Yorkshire hotel operator came into difficulty with his High St. lender when the initial term of his debt had expired.

Our client was unaware that his loan facility was subject to review after 5 years, this is referred to as the initial term loan facility, although the debt was amortised over 15 years, known as the repayment period, our client assumed that the initial term would simply “roll on” as long as he maintained his loan repayment.

This is a popular misconception, as when the lender initiates an end of initial term review, the lender requires a valuation for the purpose of their security, which doesn’t necessarily represent open market value, for the purposes of their loan to value covenant as a result this can lead to a breach of loan to value covenant.

In support of the valuation the lender will also require 3 years trading accounts and management information to date to ensure that business can meet its debt service obligations both actual and when stress tested, as well as ensuring that there are sufficient cash available within the business to service the debt then this may also lead to a breach of covenant.

Breach of covenant

As our client incurred a breach of all of these covenants he was transferred to business support which is a specialist division within all banks that decide if the business can be “turned around” and if not, as was the case with our client, they (the lender) have requested that their debt be refinanced or the property (the lenders security) disposed of either consensually or non-consensual basis.

Turnaround finance specialists

Our client opted for a refinance and after searching the internet for “turnaround finance” specialists instructed Stewart Hindley to provide a refinancing solution.

After a thorough review of our clients’ business and with the assistance of a hospitality consultant to improve the metrics and dynamics of the trade Stewart Hindley were able to provide a refinance solution on preferential terms over a fully amortising period of 25 years with an alternative High St. lender.

Understand your hotel loan

The take away from our client’s experience is to fully understand what type of loan you are being offered and don’t be reluctant to ask questions and get a full explanation from your lender if you are in any doubt as they are duty bound to act responsibly and treat their customers fairly.

If in doubt about your business loan or your relationship with your lender, speak to a debt restructuring specialist, such as Stewart Hindley and Partners, for impartial and no obligation advice.

Call us on 01488 684 834 to get help today



Hotel Refinancing – Midlands Region

Refinancing a hotel

Due to a lapse of planning convents for an external function space our client was unable to host wedding and corporate events which resulted in a significant decline in revenue.

Whilst our client immediately advised the lender of the lapse in planning consent and corresponding change in trading profile the lender wasn’t sympathetic as this compromised both debt service and LTV covenants.

This situation resulted in our client being placed in “business support” with a view to a consensual disposal which wasn’t in our client’s best interest or those of the lender.

Debt restructuring plan

After a protracted period of consideration and negotiation the lender agreed to a debt write down of 50% representing £1,500,000 which facilitated a refinancing solution provided by Stewart Hindley firstly with a near-prime lender to wash away the “toxicity” of the debt write down which was ultimately refinanced with a prime lender.

This refinance solution avoided further trade disruption to our clients’ trade and provided certainty whilst planning consents were re-instated and circumvented a potential time consuming and distressed disposal process which wouldn’t have led to a greater loss to the lender than the debt write down.

For more information on how we can help restructure your debt please call us at 01488 684 834

Or contact us today by email

Debt Restructuring – Town House Hotel – Warwickshire

Our client was in the process restructuring his hotel’s assets from a full service product, to short stay accommodation apartments, as our clients full service hotel concept with à la carte dining wasn’t sustainable due to the change in dining out preferences, which resulted in high costs and unpredictable trading, leading to a trading loss and inevitably a breach of debt service covenants.

The existing debt of £6,000,000 was disproportional to the trade and asset value and the change to short stay accommodations, although a viable proposition couldn’t service debt when stress tested and sensitised against the lenders criteria, which in-turn led to a default on debt service covenant. The reality of the situation was that the business could only service debt of £3,000,000 on a full repayment basis.

Debt restructuring solution

After working with a number of commercial valuers to ascertain distressed market values, we entered into negotiation with the lender and secured a debt write down of 50% amounting to £3,000,000 based on comparable market values. The debt write-down was initially refinanced by a specialist near prime lender which we then subsequently refinanced after 36 months to a term debt facility on standard commercial terms.

For more information on how we can help restructure your debt please get in touch

Hotel Debt Restructuring – South East England

Our client owned and operated 2 branded hotels and traded these concerns very successfully supported by his lender who is a well-known High St name. The financial crash of 2008 corresponded with the expiry of our client’s loan agreement of £3,000,000 which was written over an initial 5-year term, amortised over 20 years, on an interest only basis.

Our client’s difficulties occurred when the lender required a current valuation to extend the term of the loan for a further 15 years which was undertaken at our client’s expense. The timing couldn’t have been worse for our client as market values had plummeted for hospitality business post the crash by some 30% and as a consequence an unintended breach of Loan to Value (LTV) occurred.

The was situation was made worse by the profile of the loan which was on an interest only basis which meant that no capital was repaid during the initial term. The write down of values coupled with no capital repayment further compromised the LTV’s resulting in the debt being called in.

This gave our client cause for concern as he could see no way out other than selling his assets hotels at distressed market values which wouldn’t have paid off the principle debt.

Our client was recommended to us to restructure his business debt and secure a refinancing solution. However, given the downturn in the market post the crash our clients trade had reduced substantially to a point where the business could only service debt on a full repayment basis of £1,000,000. As a consequence, we at Stewart Hindley agreed a debt write off of £2,000,000 which enabled our client to continue trading without losing his hotels and livelihood.

The debt write-down was agreed on the basis of securing a refinancing solution in the sum of £1,000,000 with a prime lender, ahead of negotiations so as to provide a certain and secure outcome to enable the deal to proceed, which took almost 6 months to achieve with many meetings involving the existing and the new lender.

For more information on how we can help restructure your debt please get in touch

Hotel Business Recovery Aberdeenshire

The Objective

The owners were referred to Stewart Hindley & Partners as hospitality business recovery specialists by a leading commercial property agency in Edinburgh. They were under considerable pressure from HMRC’s Late Stage Debt Resolution Collection office to make a full and immediate payment of some £400,000 in respect of their arrears, or face legal recovery action in the Sheriffs Court (with the prospect of having their assets seized to settle the debt). The owners were unable to make the payment so called in Stewart Hindley to manage their business recovery.

The Solution

The Stewart Hindley team immediately undertook:

  • a Creditors Voluntary Liquidation process to halt any further action by HMRC
  • a financial restructure of their hotel business, under a new operating entity

The Result

The owners were then able to continue trading under a new structure affording them a fresh start, without the inherent, historic debt burden.


“Our professional advisors thought that our situation was unrecoverable and were unable to help. So we had nobody to turn to and faced the prospect of having to sell our hotel, which was also our our home which was part of the bank’s security.

“Stewart Hindley LLP where recommend to us as they have a track record in hotel business recovery. Without obligation we discussed our circumstances and within 48 hours they had come up with a business recovery strategy which enabled us both to secure the freehold of our hotel, release the security held by the bank over our home and to trade without any loss of business continuity. We owe them a debt of gratitude.”

If you would like to know more about our hotel business recovery services, please email us for further information.

Hotel Business Recovery – Berkshire Country Inn

The Objective

To assess their situation with a view to undertaking this hotel business recovery.

The Solution

As commercial property finance experts, Stewart Hindley & Partners immediately undertook:

  • a business review, which identified the reasons for the decline in trade and the corresponding loan arrears
  • to present these findings, together with a business recovery plan, to the lender. However, because they were more than 3 months in arrears, the lender regrettably declined to suspend the summons despite a loan repayment schedule based on a secondary debt.

At this stage, the Stewart Hindley team was able to step in to represent their clients in the County Court and had the action suspended.

The Results

  • The hoteliers were able to recover their trading position and to repay their arrears over a period of 12 months.
  • Stewart Hindley & Partners then successfully renegotiated the terms of the client’s hotel loan on a fixed rate basis over a longer term. This ensured the certainty of debt repayments going forward.

Client Comments

“We were constantly managing our cash flow and trying to find ways to repay our mortgage arrears which resulted in a loss of focus on the revenue required to meet our commitments. We had in effect buried our “heads in the sand” when it came to the mortgage arrears.

“It became apparent after meeting with Stewart Hindley & Partners that we were not alone in this situation as they had acted for clients in similar circumstances and had achieved a positive outcome which gave us confidence from the moment we met with them.

“They recovered our business, provided additional secondary debt and importantly dealt with the lender with whom we now have a good and positive working relationship without the costly need for hotel refinancing”.

If you would like to know more about our hotel business recovery services, please email us for further information.

Hotel Business Recovery Perth & Kinross

These clients had been experiencing difficulties with the payment of VAT and PAYE due to a decline in trading and a slump drop in visitor numbers to the locality. Our clients were also under pressure from their bankers as they were in breach of their debt service covenants and as a consequence were at risk that their bank would call in their loan.

The Objective

Hospitality Business Recovery specialist, Stewart Hindley LLP, was approached to liaise with HMRC with the aim of agreeing a realistic debt repayment structure based on their ability to pay down debt over an agreed period of time.

The Business Recovery Solution

Stewart Hindley assigned a Senior Partner to take direct responsibility for liaising and negotiating with HMRC to reach a consensual agreement to meet the VAT and PAYE arrears.

During this process Stewart Hindley also liaised and worked with their client’s bank on a financial restructuring solution to support their hospitality business and debt to ensure that they could meet the historic debt.

The Result

Moving forward, the business was able to meet its current and future obligations to the bank and other creditors and improve its revenue and cash flow.


“Our previous accountants had no real understanding of our trade and had failed to advise us of an appropriate trading structure should we be unable to meet our liabilities. As a consequence we almost lost our business and our home due to debt collection measures from HMRC.

Stewart Hindley resolved our situation within a matter of weeks. Without their support we would have lost everything!”.

Hotel Business Recovery – Devon Country Inn

These “new to trade” owner operators had regrettably encountered poor trading conditions since they acquired their Country Inn some 18 months previously.

The Objective

The hoteliers made contact with us via our web site as they were encountering difficulties meeting their monthly mortgage repayments and their lender was unable to grant them any further flexibility and were in the process of calling in their loan. A hotel business recovery plan was required to provide a hotel insolvency solution.

The Solution

After contacting and meeting with their lender, Stewart Hindley & Partners agreed to undertake, on behalf of our clients, a comprehensive business review which identified that their overheads, particularly wages, were excessive and that they were trading whilst insolvent. To resolve this situation we implemented the following:

  • an immediate reduction in wages
  • identified the need for improvement in gross margins on food and beverage
  • a web based marketing strategy to improve room revenue attainment

The Results

A full hotel business recovery. We were able to demonstrate to their lenders that our clients could continue to trade the business and meet the mortgage arrears and future payments.

Client Comments

“We were in over our heads and thought that running a Country Inn was similar to our previous care home business. While the lender was flexible there is no doubt in our minds that they would have repossessed our property if we hadn’t had the support form Stewart Hindley & Partners.

Stewart Hindley & Partners continues to offer us advice and support to ensure we don’t get into the same predicament again!”

If you would like to know more about our hotel business recovery services, please email us for further information.

Hotel finance case study – Derbyshire

The Objective

Chris & Zoe Hipwell planed to relocate back to the UK after 25 years in Los Angeles; they were referred by their commercial agent to Stewart Hindley & Partners as specialists in the hotel finance sector. Working with Stewart Hindley & Partners, they then searched for a boutique hotel that met their requirements. Most importantly it had to be one that was fundable, as Chris & Zoe had no current UK credit history.

The Solution

Even whilst Chris & Zoe where still residing in Los Angeles, After securing a decision in-principle Hindley and Partners was able to:

  • Help identify Hodgkinsons Hotel and Restaurant in the Peak District as a suitable property
  • Secure a decision in principle from a leading commercial lender, finding one that specialised in British Expats wishing to return to the UK to purchase hospitality businesses
  • Source long term finance options based on Chris & Zoe being “new to trade” operators.

The Result

A hotel loan was secured on advantageous terms which allowed for a degree of flexibility whilst they became familiar with the trade. This ensured they were able to meet their loan commitments to the lender and allowed them to concentrate on developing their trade and establish the business going forward.


Stewart Hindley & Partners dealt with every aspect of the debt and transaction which included the valuation report and agreement of the goodwill and fixtures and fittings apportionment, to maximize our SDLT allowance, whilst we where still living in Los Angeles.

All that was required of us was to meet the lender on our return to the UK and sign on the dotted line! We can’t thank them enough, as it was thoroughly professional process which allowed us to concentrate on relocating back to the UK.

Chris & Zoe Hipwell
Hodgkinsons Hotel & Restaurant