THE HIGH Court has appointed a provisional liquidator to a company which operates a four-star hotel and spa in Co Leitrim.

Mr Justice Liam McKechnie yesterday appointed Kieran Wallace of KPMG as provisional liquidator to Dream Hotels Limited, with a registered office at Corrachuill, Drumshanbo, Co Leitrim, which operates the Lough Allen Hotel and Spa in Drumshanbo after being told the company is "grossly insolvent" with estimated debts of some €5 million.

The hotel employs 60 full-time staff, has 59 rooms, 29 suites, a luxury spa, swimming facilities and a Michelin Guide restaurant.

The appointment of the liquidator was sought by Paddy White, Kilberry Manor, Kilberry Co Meath, a creditor and a director of Dream Hotels, who said the firm was unable to pay its debts and owed some €4.5 million to him and companies associated with him.

Gary McCarthy, for Mr White, said the appointment of a liquidator would protect the interests of the creditors.

There was a "sense of urgency" in the matter as the company owed the Revenue Commissioners more than €300,000. The Revenue, unless the liquidator was appointed, would instruct the county sheriff to seize the company assets from the hotel and remove the hotel's fixtures and fittings, without which it could not operate.

If the hotel ceased to trade, then Dream Hotels's only asset of real value would be lost, Mr McCarthy said.

Mr White believed it was in the creditors' best interests that an experienced insolvency practitioner is immediately appointed to assign the hotel's occupational lease on a going concern, Mr McCarthy added.

The court was also told that Mr White had had talks with an possible interested party but the negotiations could not lead to anything if there was a threat to seize the assets.

Mr White had said that occupancy rates required for the hotel to break even have not been met.

Earlier this year Mr White agreed to take steps to improve Dream Hotels's financial position but, due to factors including the current economic downturn, believed there was no prospect of the company trading out of its difficulties.

The company's only two directors are Mr White and Eric Speekinbrink of Mahanagh, Drumshanbo.

The hotel was constructed in 2003 and the registered owners are the Lough Allen Hotel and Spa Partnership who purchased it as part of a tax relief scheme and then entered into an occupational lease for the hotel with Dream Hotels for a period of 21 years.

To qualify for tax relief the hotel is obliged to remain in operation for seven years after which Mr White had the option of purchasing it from the partnership.