Mercure St Helens sold out of administration for £3.75m

The Mercure St Helens has been sold out of administration for £3.75m after falling into financial difficulties and a state of disrepair that meant the safety of guests could not be ensured.

Property agent Knight Frank marketed the 84-bedroom hotel in Merseyside earlier this year and, after an initial bidder failed to exchange, a second unnamed bidder was secured and exchanged in August. The hotel is now operating as the independent St Helens hotel having undergone repair work under the administrators.

On 15 January this year Nimish Patel of Re10 (London) was appointed as administrator of the company that owned the freehold of the hotel, Balaji Hotels St Helens, of which Gaurav Agarwal was the sole director, as a result of unpaid loans to the Bank of Baroda and the Bank of India.

The administrator's reports detailed how the hotel was left without senior management following the departure of key personnel, explaining that staff had not been paid for two months.

Administrators were unable to locate any meaningful financial records to obtain a clear view of trading, and were faced with the challenge that the hotel was managed by Jupiter Hotel Management, also owned by Agarwal, which employed all staff but had not gone into administration.

The report says Agarwal allowed the hotel to get into a state of "considerable disrepair", with the roof badly damaged resulting in water leaking into rooms on the the top floor, making them unlettable and raising serious safety hazards throughout the building.

Balaji Hotels St Helens acquired the hotel in 2010 for £2.87m out of administration with funding from the Bank of Baroda. The Bank of India financed the refurbishment of the hotel in August 2013, with both loans totalling £5.5m.

Balaji Hotels St Helens went into administration owing creditors approximately £160,651, including £19,000 to AccorHotels and £106,549.19 to HMRC, on top of the £5.5m owed in bank loans.

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