A hotelier who left debts of nearly £400,000 will not be investigated by the Insolvency Service after the receivers failed to identify any misconduct.

The receivers, David Crawshaw and Richard Hill, were asked to report on Jeremy Parke, who owned the Studley Priory Hotel, after a creditors' meeting in April last year.

Mr Parke and his wife Linda in front of the hotel The Studley Priory, in Horton-cum-Studley, is now a country house after being bought from the receivers by a private individual for about £3m.

The receivers said in a statement: "KPMG was asked to investigate the conduct of the directors and this has now been carried out."

An Insolvency Service spokesman said: "The report didn't identify any misconduct, so there is no investigation." The Insolvency Service is part of the Department of Trade and Industry.

But creditor Robert Mardle, of Oxford City Supplies, based at Osney Mead, Oxford, said: "A lot of small businesses lost money. I don't think we will ever see that money again and it is hard for a business of less than £1m turnover to lose £2,000."

KPMG were appointed as receivers last January, but failed to find a buyer for the hotel and 32 people lost their jobs.

The hotel had debts of £616,071, and agents FPD Savills said it sold for "in the region of" the £2.75-£3m guide price.

Most of that has gone to repay a bank loan of £1.6m, plus interest and charges, as well as £578,000 lent by associated companies, including Stanwell Hall Hotel in Staines, Middlesex, which Mr Parke still runs.

The Inland Revenue and VAT office, which is owed £150,000, would then be paid, while unsecured creditors will get nothing.

KPMG rebutted criticism by creditors that the hotel was worth more. In a statement, it said: "As part of the administrative receivership, the property was sold at full market value, following exhaustive marketing undertaken by our property agents FPD Savills and their recommend- ation to the administrative receiv- ers." The receivers submitted a report in April saying 193 creditors were owed nearly £400,000.

Many of them are small businesses in Oxfordshire, including Cassington Garden Centre, builders Sharp and Howse and two recruitment companies.

The report said Mr Parke had spent a substantial amount refurbishing Otmoor Lodge, previously the King's Arms pub, just down the road from the hotel.

This compounded problems caused by world events and the foot-and-mouth outbreak.