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A Queenstown lakes area developer is blaming financiers Bridgecorp and Westpac for his project's demise, saying a fire sale of properties in his project could easily have been avoided.
Buzz Scown, whose company, Private Property Partners, was developing the 3.6ha residential subdivision Lochburn, criticised the financiers who loaned him money for the 26-section venture.
Not all the sections sold and the $8 million project suffered a series of setbacks so Westpac has called an end to its involvement.
Sixteen sections were put up for mortgagee sale, with tenders closing on September 7.
But Westpac yesterday defended its involvement in the project, saying it acted reluctantly.
"Mortgagee sales are a last resort and something we revert to only after exhausting other options," said spokesman Craig Dowling. "At all times we act in good faith and our preference is to work with our customers to resolve debt-servicing issues, but as holder of a first mortgage it is ultimately our responsibility to protect our investment."
Scown and his business partner, Stuart Mitchell, sold 10 sections in the past few years. When their loan was in default, Westpac pulled the plug and forced the mortgagee sale of the rest.
Scown is bitter about Bridgecorp's role in the project, accusing it of misusing money and charging high fees which put the project in jeopardy.
"There were a number of things Bridgecorp did which were not called for," Scown said.
"A large sum of money was set aside for the original 10 sections. The money was held aside for the Inland Revenue Department but Bridgecorp grabbed that."
Bridgecorp also suffered a high staff turnover, he said, which put him on the back foot.
"I dealt with seven different individuals there, some were good but almost every week, there was someone new there."
He also accused Bridgecorp of charging extraordinarily high fees to establish the original loan and to roll it over regularly.
"As soon as you needed to roll over for another month, a $70,000 flat fee. It was just ridiculous. It forced the project into this situation, with delays and holdups."
The Queenstown area property market had turned down lately, he said, so selling Lochburn sections demanded much more time and effort.
"Now we've lost the cycle and now it's just all hard work," he said.
Scown is also angry with Westpac over the mortgagee sale, saying the bank would get far less money back using that method, which would encourage low bids. The sections were advertised by Queenstown agent Professionals Fisken and Associates as being a "wholesale investment opportunity".
Scown said he had sought to manage the 16-section sales process in an orderly manner and wanted to be allowed to carry on negotiating to sell the sections individually. He said he had conditional agreements on seven sections.
"I'm complaining to Westpac as they decided to sell as a parcel because they thought it would take too long to sell sections separately.
"The bank has a duty of care they have to offer us."
Capital Investment Planning, a Christchurch firm of financial planners, wrote glowingly about Lochburn in a newsletter three years ago when the project kicked off.
"Lochburn, as its name suggests, is bordered by lake and river, has evolved for business partners Buzz Scown and Stuart Mitchell who say they wanted to create a special place that families could escape to and relax Kiwi style," said the article, published in Capital's June 2004 newsletter.
