In light of this week’s news that Sydney’s iconic live music venue the Sandringham Hotel, better known as the Sando, had been sold after being put into receivership since July with debts of $3.6 million to Bankwest, the venue’s former owner Tony Townsend says that he plans to sue Bankwest after he only found out about its sale through social media.
In a press release that circulated on Monday afternoon, receivers Ferrier Hodgson announced that the 126-year-old hotel had been sold to a new owner who had indicated an intention to run the business as a live music venue.
The sale price and the name of the purchaser were kept confidential, but according to industry sources it was sold to Tim Northeast, Matthew Everett, Richard Ludbrook, and Andrew Mansfield – who own Melbourne’s Corner Hotel and Northcote Social Club – for between $2.6 and $2.8 million.
The new owners look at expanding their Melbourne live music venues with a sister branch called the Newtown Social Club which was announced last week.
All of this however, was news to Townsend, who tells SmartCompany that the receivers had not alerted him to the sale of the Sando. “To find out that way was pretty upsetting to be honest,” said Townsend on discovering the news.
“I contacted the liquidators and they had only just been informed by Ferrier Hodgson that the contract had been exchanged on Wednesday,” he says. “I’m the major unsecured creditor as the previous owner and not to be told is a little bit disappointing to say the least.”
Townsend also added that while it appeared to be reported knowledge that the legendary pub had been sold and ready to be converted, he had yet to receive any formal notification from Ferrier Hodgson or Bankwest about the sale and has no idea how much creditors, including himself, will get back.[do action=”pullquote-2″]”I’m the major unsecured creditor as the previous owner and not to be told is a little bit disappointing to say the least.”[/do]
Townsend says he’ll “certainly” be seeking damages against Bankwest once the sale goes through, “I have to sit tight and wait for the asset to be sold and I have to endure all of this and then look at our position as regards to damages,” explains Townsend, who would seek an injunction pending a possible resolution through damages.
“Even though we would say the bank did not have the right to move in in the first place or to appoint a receiver, if that is proven then the whole lot of this is illegal,” he says. “There are a number of areas we believe the bank and the receivers have acted improperly because we never missed a payment and we never defaulted on the loan.”
Its not the latest controversy surrounding the sale of the live music venue, it’s a long and messy story that all began back in July, when Bankwest – which has since been purchased by Commonwealth Bank – showed up at the venue without warning with news for Townsend, to pay the remaining $3.6 million of the loan within a week or else both he and The Sando’s assets would be liquidated to pay back the debts.
A partnership with an advocacy group, several protests and rallies, and a whole lot of mudslinging later, and Townsend failed to secure a buyer at the 11th hour , while emphasising the high leverage of 65% placed on the venue by Commonwealth and Bankwest as well as accusing them of shady dealings by the banks and its receivers as “misleading”, accusing them of never paying their interest as “just not true.”[do action=”pullquote”]”Even though we would say the bank did not have the right to move in in the first place or to appoint a receiver, if that is proven then the whole lot of this is illegal,”[/do]
‘Default’ being the key term that the banks have manipulated to achieve their ends, essentially referring to the venue’s EBIDT levels which were set in the loan agreement with Bankwest, but also the bank’s loan value ratio – essentially the value of the loan (Bankwest’s proposed $3.2 million) and the asset purchased with that loan (The Sando).
Once Towsend’s funds had been bled dry, the banks found that this ratio did not satisfy whatever ends they were attempting to achieve, and swiftly came knocking on The Sando’s door asking for the full repayment on their enormous loan.
Townsend says that although receivers had failed to notify him of the sale of the venue to new owners, he took some solace from reports that the Melbourne team behind the Corner Hotel and Northcote Social Club were looking to continue to operate the site as a live music institution.
“I am very glad that it is going to a music family,” says Townsend. “to be honest; if it has to go this way I am so happy that the Save the Sando campaign rang a loud bell and made some people aware that there was a risk of developers getting it.”
“What we set out to achieve was not just rescue it for me but put someone in place to carry on the history and heritage of what the Sando was,” he continued. “It’s a bad result for me but it’s the best result we could possibly hope for under the circumstances.”
Commenting on his plans to sue the banks for securing the sale without notification, Townsend is prepared for the long haul: “It will be a long fight. I am sure the bank will drag it out: they are very rich, they will want to create as much pain as possible and if we look like winning they will want to settle it out of court so nobody knows they lost.”Write a Letter to the Editor