AN investigation has been launched into a room purchase scheme after two North-East hotels went bust and many were left jobless.

The Grand Hotel in Hartlepool and The George Coaching Inn at Piercebridge, Darlington, are two of the venues that have closed following court action against six companies each owning a separate hotel under the Shepherd Cox Hotel brand.

The other hotels which have shut are in Bicester and Manchester and their closures, along with The Grand and The George, have led to around 100 people being made redundant.

A further North-East hotel was also affected but is not operated by the company in administration and therefore its future will be decided by a third party.

The six Shepherd Cox companies were placed into administration following a court application by several investors.

The Northern Echo:

The George at Piercebridge, Darlington, announced it had gone into administration via a facebook post Picture: SARAH CALDECOTT

The investors had bought hotel rooms and were guaranteed a quarterly rent on them, as well as a resale value of 110 per cent of the original price of the room.

However it was found that in some cases, sufficient rent was not being paid to the investors.

The case was handled by law firm Crowell & Moring and following its conclusion, partner Paul Muscutt said: “The ruling of the Insolvency and Companies Court is the right result for the investors who can now begin to get answers in relation to the management and running of their investments.

“In the next phase, our team will be advising the administrators in investigating the affairs of the companies and the directors and realizing assets to maximize returns to the creditors.”

Quantuma have been appointed as administrators and say they are now investigating what happened to the “significant funds received” by the businesses from the investors who bought hotel rooms.

Quantuma partner Simon Bonney said: “I can confirm that myself and Carl Jackson have been named joint administrators of over six companies following Court Orders for the appointment of Administration.

The Northern Echo:

The Best Western Grand Hotel in Hartlepool has also closed Picture: GOOGLE

"We are exploring options in relation to the sale of hotels in order to try and secure the re-employment of staff and honour ongoing bookings.

"We are also investigating what happened to the significant funds received by each company in relation to the sale of hotel room to investors where the funds received significantly exceeded the purchase price of the hotels by the Shepherd Cox Group.

"If those funds had remained in each Company then short term trading would have been a viable option”