Hotel tycoon claims he was ‘seriously wronged’ by Lloyds Bank

Lloyds Banking Group is set for a £120 million High Court showdown with a Scottish hotels tycoon who claims it forced him into selling parts of his empire at a knockdown price.
Donald Macdonald is suing over claims he was “seriously wronged” by Bank of Scotland, the lender that was taken over by Lloyds in its rescue of HBOS during the financial crisis.
A trial is scheduled to begin next week, in a case in which notorious HBOS banker Peter Cummings and the former head of Lazards, William Rucker, play walk-on roles.
The tycoon established Macdonald Hotels & Resorts through a management buyout backed by Bank of Scotland in 2003. The business grew rapidly as Macdonald acquired a number of Forte hotels after its takeover by Granada and became the UK’s largest privately owned hotel group.
He claims he was then forced to sell several of his hotels at below-market rates following pressure from the bank to reduce borrowings that had peaked at £620 million in 2005.
Macdonald’s lawyers claim that the company has suffered losses of between £101.9 million and £118.5 million.
Cummings is named in the case as having been involved in the negotiations around development of a site called Botley Park, which Macdonald claims he was forced to sell to Linden Homes for £58.6 million, far less than the £80 million to £120 million an adviser said it ought to have fetched.
The banker, who is not accused of any wrongdoing in the case, is famed for having been given a lifetime ban from the City and fined £500,000 by the Financial Services Authority over his role in aggressive lending by HBOS in the run-up to the financial crisis.
In the years after Lloyds rescued HBOS, it was forced to offload, or reduce exposure to, hundreds of billions of pounds of property loans made by the Bank of Scotland subsidiary to shore up its balance sheet. It is alleged that the Macdonald debts were part of this.
Rucker, who is now chairman of British Land and FTSE 100 investment firm ICG, is named in Bank of Scotland’s’ defence as having been previously being an adviser to Macdonald during his time at Lazard.
It is unclear whether Cummings and Rucker will be called as witnesses.
Lawyers for Bank of Scotland argue that there was common ground between the two parties from 2010 that Macdonald Hotels needed to “deleverage”. They say that it was for the company to decide which assets should be sold to repay its loans.
A spokesman for Lloyds said: “We do not believe that the case has any merit, and dispute Macdonald Hotels Limited’s claim. As the proceedings are ongoing, it would be inappropriate to comment further at this stage.”
A spokesman for MacDonald Hotels said: “Macdonald Hotels Ltd believes that it has been seriously wronged by Lloyds Bank since it took over The Bank of Scotland in 2009. It is enormously regrettable that we were left with no option other than to start proceedings on 25 October 2017 and ultimately trust this matter to the court in the forthcoming trial.”