Bathgate, Scotland-based Macdonald Hotels & Resorts experienced substantial legal costs followings its failed case against Bank of Scotland, according to an earnings statement.
Macdonald's £118 million ($158.2 million) lawsuit against the Bank of Scotland filed in October 2024 alleged a breach of a shareholders' agreement that involved the forced sale of some of its real estate portfolio. A High Court judge ruled in favor of the bank in January.
Macdonald Hotels & Resorts reported its legal spend during its earnings period — including the trial period — totaled £22.9 million. It said the legal costs and settlement amounts totaled £15.3 million.
The hotel owner-operator, which has a portfolio of 34 hotels in the U.K. and four resorts in Spain on the Costa del Sol, said in the statement these non-recurring, exceptional legal costs have resulted in a “loss for the period [of] £1.5 million, on a turnover of £127.2 million, compared to a loss of £0.2 million on a turnover of £128.9 million” in the same period the year before.
Macdonald received a £17 million loan in February to offset the High Court ruling. It repaid the bridge loan in full in September after selling the Macdonald Elmers Court Hotel & Resort for £22 million, realizing a profit of $18.5 million. The company said that sale of the 42-room hotel in Lymington, Hampshire, England, also generated additional surplus cash.
According to a summary of the High Court’s final decision on the matter in January from legal firm Clyde & Co. — which was not directly involved in the case — a judge ruled the “bank had not breached an implied term by preferring its own commercial best interests over those of the borrower in circumstances where no reasonable entity in the bank’s position could have refused consent.”
The summary of the judgment added “the facility agreement prevented the borrower from creating any security or selling or disposing of any relevant assets otherwise than with the [Bank of Scotland’s] prior approval. The borrower wished to refinance another of its hotels with a different lender under terms which required it to grant security to that lender. [The bank] refused to consent to the creation of that security.”
Two of the hotels Macdonald claimed it was forced to dispose of were the 84-room Marine North Berwick in North Berwick, Scotland, in March 2014, and 151-room Randolph Hotel by Graduate Hotel in 2015. Both hotels are owned by Nashville-based AJ Capital Partners. A third hotel involved was the Old England Hotel on Lake Windemere, sold in August 2015.