The NSW Supreme Court has ordered Wagga's International Hotel be put into receivership due to an "intractable dispute" between its directors over $2.6 million in business shares and wages.
Justice Kelly Rees found there was an "inability to agree upon a regime to manage the hotel" between majority owner Basil Berrigan and his nephew, part owner and former hotel manager Joel Berrigan.
The disagreement between the two family members and business partners stemmed from Joel Berrigan's plan to build a new 42-room hotel on Forsyth Street in Wagga's central business district.
Justice Rees found that high-level business decisions could not be made due to a "claim by Joel Berrigan and his wife for unpaid wages totalling some $1.625 million" and a dispute over a $1 million share in the hotel.
"Basil Berrigan expressed concern that, if the claims for backpay are met, then the cash at bank of [the hotel] will be expended," Justice Rees stated.
Basil Berrigan, as the plaintiff, told the court "that the creditors, members and employees of [the hotel] would be disadvantaged if the court permitted the present impasse between the directors to continue".
The court heard that the hotel, bar and restaurant had been unable to appoint a new general manager for the past six months.
The owners have also been attempting to reach an agreement to sell the hotel for almost a year.
Court-appointed receiver Alan Hayes, of Sydney firm Hayes Advisory, told The Daily Advertiser that the International Hotel was "still trading, and trading well" but he would not comment further.
The Daily Advertiser has contacted Basil and Joel Berrigan for comment but they did not respond before publication.
Last month the Supreme Court issued an ex tempore judgment that ordered the company that operates the 80-room hotel on Lake Albert Road, Crow Inn Pty Ltd, into receivership.
The court refused an application to appoint a liquidator to Puddy Pty Ltd and its trust, which owns the hotel property.
Justice Rees did not make any judgment on the other long-standing disputes between the Berrigans.
Basil Berrigan had attempted to "buy out" Joel Berrigan's share of the hotel and property for $4.16 million as the new CBD hotel would create a "conflict of interest".
However, this action led to another dispute over who had a historical claim to 10 per cent of the enterprise formerly owned by the Berrigan family's previous generation.
Joel Berrigan told the court that he would be willing to buy out Basil Berrigan's hotel shares "once the issues in dispute between us have been resolved".
"The application is not based upon the insolvency of Crow Inn or Puddy," Justice Rees stated.
Justice Rees noted the hotel had cash of $2.4 million, a bank loan of $3 million and "significant equity" in the $9 million property.
The court was told the hotel normally employed 35 people but had been operating with eight staff due to the coronavirus pandemic.
Joel Berrigan told the court the operating business had $700,000 in cash, was breaking even, and he was concerned that appointing a liquidator "would be tremendously damaging to the hotel".
The court was told Joel Berrigan and his wife, Rebecca Hachem-Berrigan, purchased land at 81 Forsyth Street in Wagga in March 2018.
Three days later, Basil Berrigan had coffee with Joel Berrigan in Sydney.
"Joel Berrigan said he intended to build a hotel there. Basil Berrigan objected as he thought the hotel would be in direct competition with the International Hotel [and] create a conflict of interest and Joel Berrigan should withdraw the offer," Justice Rees stated.
Basil Berrigan later found out Joel had taken possession at Forsyth Street before the two had met over coffee and "was not pleased".
Joel Berrigan and Rebecca Hachem-Berrigan resigned from the hotel on April 9.
Ms Hachem-Berrigan claimed she had "never been paid" for eight years working at the hotel and sought more than $695,000 in backpay, with Joel Berrigan claiming more than $930,000.
"Basil Berrigan does not accept these claims for unpaid wages but says that Joel Berrigan received substantial dividends instead," Justice Rees stated.