Liquidators have been appointed to wind up a Colchester letting agency.

Corporate recovery firm DTE has written to creditors of Church Street-based Hot Lets, inviting them to a meeting next month.

The firm closed suddenly last week, owing hundreds of pounds to landlords and tenants in rent and deposits.

About a dozen students who were renting through the firm have contacted Essex University's accommodation office, seeking advice.

Landlords told the Gazette the company owes them sums of £1,400 or more.

In some cases, tenants are unsure how to proceed as they do not know who owns the properties they are renting.

James Hurrell, of rival agent Saxons, today warned it would be hard for landlords to recover cash from Hot Lets.

"Under legislation passed last year, agents are obliged to put tenants' deposits into an insurance-based scheme that is protected," he said. "If a company spends deposit money, it would be possible to bring a criminal prosecution.

"But if landlords are owed money they will have to go through the small claims court, which can be a lengthy process."

Mr Hurrell added that businesses, including Saxons, which are members of the Association of Residential Letting Agents, agree to put rent payments into untouchable client accounts.

But he said, unlike in other industries such as the legal profession, there was no law preventing firms from putting rent money into their general business account and using it to pay wages or expenses.