London Dockside Ltd - case update

Landlord issues are complicating the administration of London Dockside Ltd., the owner of the “Hampton by Hilton London Docklands” hotel based at Dockside Road in London, leading to a situation where the company’s administrators disagree on the appropriate exit strategy for the company.

The company became unable to meet its obligations largely as a result of the impact of the Covid-19 pandemic. In January 2022, its landlord, the London Borough of Newham, commenced court proceedings to recover the portion of its outstanding rent owing for the period post-18 July 2021. Pursuant to the Commercial Rent (Coronavirus) Act 2022, the rent accrued prior to that period is protected and subject to a regime under which the landlord or the company may refer the matter to arbitration.

Following receipt of the court proceedings, the company attempted to negotiate with the landlord, but an agreement could not be reached and the company was placed into administration on 31 March 2022 by its director. Simon Bonney and Michael Kiely of Quantuma were appointed Joint Administrators (the “Quantuma Administrators”). The Quantuma Administrators were of the opinion that a rescue of the company as a going concern was achievable, but that this was subject to resolving the historic rent arrears through negotiations with the landlord and/or through arbitration. The Quantuma Administrators also advised that there was sufficient working capital available to enable them to continue trading the hotel for a period.

They sought approval of the proposals by the deemed consent procedure, but the landlord as majority creditor requisitioned a decision procedure to seek the replacement of the Quantuma Administrators. It also objected to the use of the deemed consent procedure and requested that a meeting of creditors be convened. The Quantuma Administrators then made an application to the High Court seeking directions on the foregoing matters, and the Court eventually ordered that Michael Kiely be replaced by Simon Carvill-Biggs and Ian Corfield of FRP (the “FRP Administrators”). The Court also ordered that Simon Bonney, the remaining Quantuma Administrator, be responsible for the decision-making in relation to whether to commence the arbitration proceedings and the conduct of those proceedings, and that the FRP Administrators be responsible for all other matters in the administration.

Since that time, the remaining Quantuma Administrator has advised that the company has referred a portion of the outstanding rent to arbitration and that, if the arbitration is successful, all creditors will likely be paid in full.

However, having considered the company’s financial information, it is unclear to the FRP Administrators at this stage how the company could be restored to solvency, as this would require a larger write-off of rent than is due to the landlord for the protected period. Accordingly, the FRP Administrators are of the opinion that a solvent exit likely cannot be achieved.

The Joint Administrators' latest progress report can be found HERE.