Documents filed by administrators for the landmark 122-year-old building said a sale process is in the early stages after a potential buyer was found.
The move followed a court application by a number of investors when the hospitality industry was hit hard by the pandemic.
Simon Bonney and Carl Jackson, of Quantuma Advisory, were appointed as the joint administrators and are now the business’s joint liquidators.
A progress report to creditors was recently filed with Companies House.
It stated there were outstanding debts to creditors of more than £2.8million and the building had suffered thousands of pounds of damage since closing.
But it added that a potential buyer has been identified.
The report stated: "The sale of the property is in the preliminary stages of being progressed with a chosen purchaser who we consider will be well placed to work with investors to take the property forwards if the sale completes.
"The joint liquidators will conclude this sale once they are in office and will report the outcome to creditors.”
The report said there has been significant issues with security and maintenance, stating: "Although measures have been undertaken to protect the value in the property, there was damage caused.”
It said £22,000 has been spent on repairs and an insurance claim made for £51,000, all of which is expected to go on further repairs.
The administrators received 53 claims from unsecured creditors, who can include suppliers, utility companies and the tax office, worth more than £2.85million.
The report said the administrators hope there will be enough money from liquidation of the company to pay them something.
The administrators have also helped employees to get payment from the Redundancy Payments Office.
The report added: "It is hoped that there will be sufficient realisations in the liquidation to allow a distribution to preferential creditors.”
As well as The Grand Hotel, other Shepherd Cox owned hotels which were affected were based in Bicester, Darlington, Manchester, Sedgefield and Chesterfield. They employed around 100 people between them.