Hotel owners banned after bank lost £31.8m
The former owners of the Paragon Hotel in Birmingham have been banned from being company directors after falsely claiming the property was to be sold and presenting accounts that inaccurately showed covenants had not been breached.
Novtej Singh Dhillon and his former wife, Sarina Thiara Dhillon have been disqualified from acting as directors for 11 years and four-and-a-half years respectively.
An Insolvency Service investigation found that Mr Dhillon caused, and Ms Dhillon allowed, the hotel companies they controlled to operate in a “manner which lacked probity”.
The companies’ bank lost £31.8m as a result of being misled.
Cheryl Lambert, chief investigator at the Insolvency Service, said: “In court proceedings relating to Mr Dhillon’s business affairs a judge branded him as a man who ‘regards truth as a merely optional extra when doing business.’ Following the Insolvency Service’s investigation I can only agree with that conclusion.”
The couple operated a group of hotels – which also included properties in Hurley-on-Thames, Kingston-upon-Thames and Amersham – all of which were subject to the same bank lending facility and cross guarantees.
However they presented management accounts to the bank, and filed full-year accounts at Companies House, which were “were inaccurate constructions” designed to show they were not in breach of covenants.
They also claimed the Paragon Hotel was to be sold to an unconnected third party from 2009, but that it had been hit by delays. During that time nearly £13m more was loaned against the security it was purported to provide. However the supposed purchaser had entered administration in 2009, and the property was ultimately sold for £3m in 2013.
