Macdonald Hotels counts cost of huge legal bill after High Court loss
Luxury chain Macdonald Hotels slumped into the red before being order to pay a huge legal bill after losing a case to the Bank of Scotland.
Macdonald Hotels sued the Scottish subsidiary of Lloyds Bank claiming it was “seriously wronged’ by the lender which resulted in it losing out on millions of pounds.
Chairman and founder Donald Macdonald issued legal proceedings against the Bank of Scotland, which is now part of the Lloyds Banking Group, in May 2023.
The claim alleged the group was forced to sell several hotels at below-market rates following pressure from the bank to reduce its borrowings.
The case focused on the sale of The Randolph Hotel, The Old England Hotel, The Marine Hotel and Botley Park.
Macdonald’s lawyers at Enyo Law claimed the company has suffered losses of between £101.9m and £118.5m, plus interest.
However, the bank’s lawyers at Herbert Smith Freehills stated that the Bank of Scotland “did not act in breach of duty as alleged or at all”.
Macdonald Hotels lost the case against the Bank of Scotland towards the start of 2025 and was ordered to pay £11.6m.
Macdonald Hotels sells site to repay loan
Now, new accounts filed with Companies House have revealed how Macdonald Hotels’ finances were heavily impacted by the cost of the case.
The chain said its results for the year to 26 September, 2024, were “skewed significantly” because of the legal costs related to the High Court action.
Those costs totalled £22.9m in the 12-month period – which contributed to a pre-tax loss of £18.9m for the year.
Macdonald Hotels had previously posted a pre-tax profit of £1.1m for the prior year.
Over the same period, the chain’s turnover fell from £128.8m to £127.2m.
The group obtained a £17m loan in February this year to help support its case position following the High Court ruling in the prior month.
The loan was repaid in full last month following the sale of Macdonald Elmers Court Hotel & Resort for £22m which raised a profit of £18.5m.
The chain added that the fall in its turnover for the year to 26 September, 2024, was mainly because of the sale of Ansty Hall in February 2023.