Townsend says he is planning legal action and is also making a submission to the Senate Inquiry into the banking sector, which is investigating claims as to whether the Commonwealth Bank sought to liquidate Bankwest customers to reduce the price paid for Bankwest.
“It will go to court and we will be seeking damages. It appears that the Financial Ombudsman Service can’t do a lot until somebody actually takes the business away from you. The court can’t stop the process until you lose it.”
Townsend says while he initially hoped to find a partner to enter into a joint venture to keep The Sando as a live music venue, it was difficult because live music venues only return around 6% while pubs which have gaming return about 14%.
“We tried to raise awareness of what a hotel like The Sando is in a community like Newtown and what it means to a community like the music community and, unfortunately, we were not able to uncover anyone who had an empathy for that use,” he says.
Townsend expects The Sando will be sold cheaply to developers and will no longer operate as a live music venue. He says the property is zoned for accommodation and can be built to four storeys.
“Someone will make $5 million or $6 million out of it,” he says.
“They won’t pay full value for it, they’ll pay fire sale value for it and it will just be another live venue gone.”
Michael Cave, spokesperson for Ferrier Hodgson, told SmartCompany it was still “early days” in the process and the receivers are still dealing with the “numerous” expressions of interest that came in.
He says the Sandringham Hotel business had been in financial difficulty since mid-2009, and Townsend has been issued with numerous breach and default notices, with his account in arrears throughout 2011 and the first half of 2012.
“The bank took the decision to appoint receivers only after considering all available options and going to extraordinary lengths in an attempt to help the customer resolve his financial issues,” Cave said in a statement.
The Commonwealth Bank directed SmartCompany to a statement it issued last month entitled “Facts about The Sandringham Hotel” which said Townsend was in default throughout 2009 and 2010, including non-payment of interest on the debt and also non-payment of land tax to the NSW Office of State Revenue.
“As the customer did not take the necessary steps to resolve his financial issues and following an extensive period of time working with the customer, the Bank appointed receivers in July, 2012,” the statement said.
