By Clyde Mooney
In a protracted dispute, Bankwest has been accused of breaching the Code of Banking Practice after re-assessing over 1000 commercial loans involving some of the country's top pubs.
Many venues and businesses have been put into liquidation in a wide-sweeping audit known as Project Magellan that is rumoured to be connected to a reduction in the $2.1b Bankwest purchase price from British HBOS by CBA.
Victor Seeto was the owner of Brisbane's successful Dog & Parrot Hotel and Glebe's Ancient Briton (pictured) and one of many owners that felt the pinch of the GFC.
Having failed to meet EBITDA (non-monetary) covenants on the finance, in an attempt to clear debt with Bankwest, Seeto had the Dog & Parrot listed for sale for eight months, with an eventual offer of $19.5 million.
Bankwest rejected this price, along with Seeto's offer of a payment of $1.3 million, instead issuing a Letter of Demand stipulating outstanding amounts were to be paid or receivers would arrive the next day.
"The basis for the default notice was incorrect and a gross breach of fairness and reasonableness. It raises fundamental questions about the bank's conduct," Seeto told TheShout.
In response to questions, a Bankwest spokesperson said that "a number of defaults occurred" on the Seeto venues and that "the suggestion that Bankwest forced customers into receivership is absurd".
"The Bank worked with Seeto for 12 months to resolve the issues, but ultimately they were not resolved and in July 2010 the Bank appointed receivers to the hotels."
The two venues were eventually sold for more than $26 million and Seeto is currently seeking settlement through the courts for reconciliation beyond the $22 million debt and massive liquidator's fees.
A professional sale of the two pubs was expected to fetch around $30 million, indicating it may still have been possible for the pubs to trade out of the situation.
Seeto claims that Bankwest originally cited failure to pay interest obligations for the forced receivership, but a successful court challenge to that saw the official explanation changed to breaches of EBITDA covenants.
The new CEO of AHA (NSW), Paul Nicolaou, declined to comment on individual circumstances, but said the association is fighting to ensure pubs are treated fairly by the banks.
"The AHA (NSW) is resolute and determined to ensure all members are dealt with fairly, equitably and ethically in their dealings with all financial institutions."
Seeto and a group of around 300 hoteliers and developers are continuing to voice their grievances through a group called 'Unhappy Banking'.