º£½ÇÊÓƵ hotel chain Macdonald Hotels fell into the red before being hit with a substantial legal bill after losing a case against the Bank of Scotland.
Macdonald Hotels took legal action against the Scottish subsidiary of Lloyds Bank, alleging that it was "seriously wronged" by the lender which resulted in it losing out on millions of pounds, as reported by .
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 early in 2025 and was ordered to pay £11.6m.
Macdonald Hotels sells site to repay loan
Newly filed accounts with Companies House have now revealed the extent to which the cost of the case impacted Macdonald Hotels' finances.
The chain stated that its results for the year ending 26 September, 2024, were "skewed significantly" due to the legal costs associated with the High Court action.
The costs amounted to £22.9m over the 12-month period, leading to a pre-tax loss of £18.9m for the year.
Macdonald Hotels had previously reported a pre-tax profit of £1.1m in the preceding year.
During the same timeframe, the chain's turnover decreased from £128.8m to £127.2m.
Following a High Court ruling in the previous month, the group secured a £17m loan in February this year to bolster its cash position.
The loan was fully repaid last month after the sale of Macdonald Elmers Court Hotel & Resort for £22m, generating a profit of £18.5m.
The chain noted that the decline in its annual turnover up to 26 September, 2024, was primarily due to the sale of Ansty Hall in February 2023.
