A winding-up petition was issued last week for PDR Construction, who were contracted to build a 90-bedroom extension on Huntriss Row to the South Bay Premier Inn, which fronts on to Falconers Road.
Philip Deyes, Sean Williams and Andrew Poxon of Leonard Curtis Business Rescue and Recovery have been appointed as joint administrators.
All operations at the site have ceased and all of the Hessle-based company’s 115 staff have been made redundant. The company’s website and social media have been taken down.
At this stage, it is unknown what the future holds for the development, which is currently an unfinished building site and under construction.
The Scarborough News understands that work has not resumed at the site since the Christmas break.
The site’s building office opposite the development is shuttered.
Scarborough company Ledden Developments Limited is now in the "exclusive possession and control" of the area, according to a notice on the Huntriss Row site.
In a statement, a spokesperson for Ledden Developments Limited said: "The development has been beset by a number of difficult issues that have been exacerbated by the pandemic, supply-related matters and more recently the financial problems suffered by the contractor.
"We have been in discussions with the contractor for several months regarding the development but were unable to seek assurances from their directors.
"The insolvency of the contractor now brings an end to that period of uncertainty. Our advisers are now in discussions with building companies that have been suggested by Premier Inn and we are actively working with them to nominate a new contractor who will proceed to complete the development as quickly as can be feasibly facilitated."
The administrators said they will be seeking expressions of interest for the sale of the construction contracts ledger, including active and completed sites.
Cllr Liz Colling, Scarborough Council’s cabinet member for inclusive growth, said: "I am sure the developers would wish for work to be completed as soon as possible and will be looking at all options to progress the project.
"I am very much looking forward to the difference the development will make to Huntriss Row and the wider town centre."
In its latest accounts to April 30 2020, PDR Construction made a pre-tax loss of £354,418 from a turnover of £82.7m.
In its accounts, Director Paul Dransfield said that growth was 10 per cent lower than expected due to the pandemic and that the firm posted its first loss for a decade.
Cllr Janet Jefferson, whose Castle Ward the hotel is in, said that the work must be completed before North Yorkshire County Council can replace the footpaths on Huntriss Row, which some residents have complained appear "messy".
A spokesperson for Premier Inn said: "We have been working closely with Ledden Developments to add a major extension to our busy South Bay hotel.
"Unfortunately, the principal contractor leading the extension entered administration last week. We are working closely with the building owner to find a replacement contractor and complete the project.
"These things inevitably take a little time to work through but we are confident a new contractor can be appointed quickly to finish off the extension."