The company which previously operated York House in Chesterfield was sold to a new business under a controversial insolvency procedure, the Derbyshire Times has learned.
York House Ltd collapsed into administration on April 6 and was bought by Bar Blanca Co Ltd, which was set up on March 24, for £30,000 as part of a pre-packaged deal, according to an administrator's report.
The directors of Bar Blanca Co Ltd are the same directors of York House Ltd, which is expected to be dissolved within months.
Jobs were saved thanks to the pre-packaged sale - but it is likely creditors of York House Ltd will be left out of pocket.
In the lengthy administrator's report seen by the Derbyshire Times, joint administrator, Gareth Self, states: "Trading commenced in August 2016 as a bar and restaurant from leasehold premises. A manager was employed to run the business on a day-to-day basis and he was responsible for the employment of staff.
"Following a meeting with the company's accountant, the directors were made aware of the significant wages costs and issues surrounding the lack of control over stock purchasing, together with a number of customer complaints made in regards to both service and quality. As a result of these issues, the manager and his wife were made redundant and the directors took direct control of the management of the site. The redundancy of the previous management led to claims for unfair dismissal and discrimination against the company. Following the regime change a number of other employees left of their own accord.
"The directors managed to replace the staff and improve the service to customers but by this time the damage had already been done and as a result the company was generating insufficient turnover to cover the significant costs of the refurbishment to the property and the day-to-day running costs.
"The directors were of the opinion that the prime reasons for the company's financial difficulties were the wage costs incurred by the company and the fall in trade following the complaints by customers. In addition, the company was not in a position, financially, to defend the unfair dismissal and discrimination claims brought by the former management.
"On April 6 I completed a pre-packaged sale of the company's business and assets to Bar Blanca Co Ltd. I was advised that a pre-packaged sale to Bar Blanca Co Ltd offered the most beneficial outcome ... and reduced the value of creditors' claims as a result of the employees' contracts transferring to Bar Blanca Co Ltd.
"The administration commenced with creditor claims anticipated to total £141,914. At the date of this report, I have received one claim for £29,463.36. Based on the information available to me at the date of this report, there is likely to be insufficient asset realisations to make a distribution to the unsecured creditors."
The report adds: "The directors were asked to consider if there were likely to be any interested parties who may have been interested in purchasing the business and assets of the company. The directors did not believe that there would be any alternative potential interested parties."
According to insolvency specialists Begbies Traynor, the ethical nature of pre-packaged sales has often been called into question but there are advantages of the process, including the increased likelihood of jobs being saved and suppliers being paid under the new ownership.
York House, which launched at the site of the former Abacus bar on St Mary's Gate last August, remains open.
Despite now being owned by Bar Blanca Co Ltd, the food and drink venue is still currently using the trading name of York House.