The five-star Muckross Park Hotel in Killarney is in receivership again this evening after the High Court refused an application to confirm the appointment of an examiner.
Mr Justice Peter Charleton said it was with regret he had to refuse the application for examinership.
However, he said he believed the receiver appointed by ACC Bank would keep the hotel open.
Receivership would achieve the same end as examinership in this case, he said.
The judge said it had emerged during the examinership application the ownership of the hotel was split equally between a group of companies on one hand and businessman Bill Cullen on the other.
ACC Bank, which is owed more than €9m, was the only entity that had full ownership of the hotel through secured mortgages to both owners.
It was not possible for the court to restructure the debt, the judge said.
ACC Bank had objected to the appointment of an examiner, claiming Mr Cullen had failed to disclose the split ownership and the existence of a lease back arrangement of a newly developed wing to the hotel.
The bank had not given permission for any lease to be issued for the new wing of the hotel, which was owned by Mr Cullen personally.
Mr Justice Charleton said the mortgage agreement specifically forbade any lease on the property and therefore the old part of the hotel had no tenancy rights over the new.
Lawyers for Mr Cullen had earlier argued the bank would have been aware of the lease as it had insisted the hotel transfer land to Mr Cullen allowing him to make personal borrowings to develop a new wing. It was always envisaged that a lease would exist.
Senior Counsel John O’Donnell accused the bank of having a wholly artificial objection to the examinership and being a "dog in the manger", not wanting the hotel itself, but not wanting Mr Cullen to have it either.
He said there was an investor willing to invest €4m in the hotel, which employed 105 people and 50 more in summer.
Senior counsel Declan Murphy for ACC said it was staggering that Mr Cullen had not disclosed the split ownership of the hotel in his first application for examinership and had later failed to disclose the lease arrangements.
However, Mr Justice Charleton said he did not believe Mr Cullen had been deliberately deceitful.
Mr Murphy said it was in everyone's interest to keep the hotel open. Jobs would be preserved and Muckross Park was "not going anywhere", he said.
In a statement this evening, Bill Cullen and his partner Jackie Lavin said they are "devastated" by the decision and that "entrepreneurs have no future in Irish life".
Earlier, Gary McCarthy SC for the interim examiner said there had been a remarkable turnaround in the business in difficult trading circumstances.
Revenue growth was 53% in 2011, room occupancy had almost doubled and food sales had risen 56%.
Revenue from the spa had risen 115% and bookings for weddings had increased.
Mr McCarthy said 16 investors had contacted the interim examiner, who believed it had a reasonable prospect of survival.
