Receivers have been appointed to a chain of 42 Marriott hotels in the UK which is part-owned by an investment syndicate formed by Derek Quinlan's former company.
The Avestus syndicate of about 10 investors owns 44pc of the chain which was once valued at €1.3bn and includes four and five-star hotels with about 8,000 bedrooms in England, Scotland and Wales.
A statement from Avestus expressed disappointment that the Royal Bank of Scotland appointed receivers Ernst and Young, as the owners felt that progress was being made in negotiating a a restructuring of debts of around €1bn.
As this is a standalone syndicate, sources have indicated that there will be no knock-on consequences for other Avestus investments, the largest of which is the Jurys Inn chain in Ireland and the UK.
The Marriott investment was made in 2007 when Avestus, then known as Quinlan Private, teamed up with Israeli property tycoon Igal Ahouvi, Dorea Investments, First International Bank of Israel, Electra Real Estate, and Delek, to buy the chain which then consisted of 47 Marriott Hotels.
It subsequently sold five of the hotels for a substantial sum believed to be close to €100m.
After the economic downturn in 2008, the hotels continued to trade profitably and generated funds to service the loans. However, it was not sufficient to pay down capital and the investors began negotiating with the banks.
In 2009, Avestus raised further funds from its clients but this was held in an account until the restructuring could be agreed. As the process dragged on, some clients took back their funds. The remainder will now be returned.
Meanwhile, a hedge fund, York Capital, acquired Lehman Brothers' share of the loans and it is believed York did not agree to the terms of the restructuring which would have involved a debt-for-equity swap.
In a statement yesterday, Avestus said the 42 hotels had continued in profit and performed considerably ahead of competitors. It also pointed out that the investment consortium had agreed to recapitalise the portfolio.
"This restructuring was fully funded and supported by the shareholders, the lead banks within the banking syndicate and Marriott Hotels and until very recently was progressing in a positive and constructive manner. We are disappointed that the banking syndicate has not reached consensus and that it has taken the unnecessary decision to appoint a receiver."
The receiver continues to operate the hotels which include the Marriott County Hall and the Regents Park in London. It does not affect the Irish Marriott hotels, which include the Shelbourne Hotel.