GLH Hotels facing £250,000 ‘guarantor’ claim

GLH Hotels is facing a High Court claim that it is liable as guarantor for almost £250,000 in rent arrears due in respect of a Swindon hotel, and required to take a new lease of the premises. UK Commercial Property Estates Ltd (UKCPE) is suing GLH, claiming it is the guarantor under two licences from 1989 and 1993, and seeking to recover a total of £239,468 plus interest, after the tenant of the premises entered voluntary creditors’ liquidation. GLH, which is defending the action, denies it is liable. According to particulars of claim filed at the High Court, UKCPE has since 2011 been the landlord of the hotel in Fleming Way, Islington Street, Swindon, previously known as the Menzies Swindon Hotel. A lease of the premises granted in 1974 is set to run until 2064, and the current annual rent is set at £250,000. The particulars say that the current registered proprietor of the term, following a number of assignments, is Menzies Hotels Property No. 22 Ltd, which went into liquidation last December. UKCPE claims that GLH – under its previous name of Mount Charlotte Investments – provided guarantees in the two licences in respect of earlier assignments of the term, prior to the assignment to the current insolvent leaseholder.And it claims that the covenants entered into in those licences run with the reversion, leaving GLH still liable as guarantor. As well as arrears and interest, UKCPE will seek an order that GLH enter into a direct lease of the hotel. However, in a defence also filed with the court, GLH says that it is not liable to pay, as the covenants in the licences were personal to UKCPE’s predecessor in title, The London Assurance, and did not pass to UKCPE. It says that its obligations as surety were limited to the period in which the term of the lease was vested in the named assignees, Mount Charlotte Hotels and Kingsmead Hotels. Alternatively, CLH argues that the lease was varied without its consent in 2009, to increase the rent by £25,000, freeing it from its obligations in any event It says that the lease has been assigned a total of seven times, four of which post-date the 1993 licence, and denies that UKCPE is entitled to require it to take a new lease of the premises. A court official confirmed that the proceedings are still effective. UK Commercial Property Estates Ltd v GLH Hotels Ltd HC14A02885 Claim filed by Michael Kilner of Maples Teesdale LLP