Insider Media Limited

Hotel operator Nite Nite Holdings fell into administration with a deficiency totalling £6.3m, a new report has revealed. The company and its subsidiary, the 104-bedroom 'pod' hotel Nite Nite Birmingham, owe more than £3.2m to secured creditor Yorkshire Bank.

Nite Nite Holdings fell into administration on 9 August after the company defaulted on a £200,000 repayment plan to HM Revenue & Customs (HMRC).

The payment plan had been set up to settle outstanding creditor and HMRC arrears; however when the holding company failed to pay an installment, its sole director submitted a notice of intention to appoint administrators.

Insolvency firm Zolfo Cooper was appointed to handle the case, which decided to continue trading Nite Nite Birmingham as a going concern, and realise the property assets of the holding company to pay one or more creditors.

At the time of its collapse, the two companies owed a combined £3.26m to secured creditor Yorkshire Bank. In the administrators' statement of affairs it said that it is "uncertain whether the bank will be repaid in full".

Along with debt to the bank, the companies' issued and called up share capital stood at a cost of £3.04m, taking its total deficiency to £6.3m.

At the time the statement was compiled, there were no preferential creditors.

Although there were no unsecured creditors recorded with Nite Nite Holdings, values of £2.59m were recorded in Nite Nite Birmingham's accounts.

Birmingham City Council is listed as a company creditor owed £34,847. Marketing Birmingham is £2,570 short and Foremost Services is owed £41,980. In all, 84 company creditors are owed a total of £297,240.

Other unsecured non-preferential claims came from loans from its holding company (£1.4m); taxation (£96,649); shareholder loans (£627,373) and sundry creditors (£31,927).

Through a summary of Nite Nite Birmingham's assets, the administrators estimate they will realise £229,463 to contribute towards creditors' owings.

The report states that the holding company's property assets could fetch £1.5m to go towards repayments.

For the year ending March 31 2010, Nite Nite Birmingham posted a turnover of £952,981; a slight decrease on its 2009 result of £976,009. The hotel was one of the first concept hotels to offer the popular Japanese windowless 'pod' style room.

From the date of administration (9 August) to 16 September, Nite Nite Birmingham recorded a trading deficit of £26,495.

Zolfo Cooper said that the hotel had received "more than 50 enquiries to date and several viewings have been arranged". The administrators requested offers from interested parties by 23 September.

The level of unsecured creditors listed is based on the amount outstanding on Nite Nite Birmingham's accounting system, said Zolfo Cooper. It added the figure was subject to change.