But he said the restructuring and massive debt-for-equity swap now being negotiated should leave something for investors.
The banks are keen to keep Queens Moat's shares, suspended in March at 47.5p, on the stock market so they have the option of floating off their stake in a few years.
Shareholders will discover exactly how much is left for them at the end of January, when the results of negotiations between the management and the banks are revealed.
The banks and the holders of the pounds 215m First Mortgage Debenture Stocks are said to be in favour of the outline restructuring proposals presented to the banks on 28 October and recommended by their steering committee. This is largely because many of the banks are unsecured lenders and are not required to raise any more money. The debenture holders are still receiving interest payments.
Queens Moat's new management has considered legal action against the company's former advisers. But it is understood to have dismissed the possibility of suing Weatherall Green & Smith, its former surveyors, because the firm's pounds 1.86bn valuation of the hotels for 1992, presented to the banks in April, was only a draft.
At the board's request, Weatherall supplied a revised figure in May of pounds 1.35bn, which was qualified because it was based on unaudited financial information. But Jones Lang Wootton was then commissioned to produce another valuation and came up with pounds 861m in September. Both firms prepared their valuations on an open market, willing seller basis.
Legal action may be taken, however, against Bird Luckin, Queens Moat's old auditor. Grant Thornton, the reporting accountants, and Coopers & Lybrand, the new auditors, are continuing to examine the company's financial affairs and may be used as key witnesses.
It also emerged this week that Donald Jackson, who used to work for Bird Luckin, carried out tax work for the company after retiring. Allan Porter, former deputy finance director, and Maurice Hart, a former non-executive director, had previously worked for Bird Luckin.Reuse content