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The Fitzroy, in Hillside Rd, South Dunedin, was run in a business partnership by owner-operators Michael Mellon and Elizabeth Fox, but closed suddenly in January without notice and the pair could not be contacted at the time.
The SBS Bank yesterday applied to the High Court at Dunedin, seeking a settlement of claim against Michael Henry Mellon for loans against the hotel.
Mr Mellon did not appear in court and Associate Judge Rob Osborne said he was ''satisfied there was no defence'' offered.
The SBS Bank mortgage over the hotel was held against a property in Glenorchy, and the Fitzroy hotel, which was put up for mortgagee sale in May. Agents handling the sale declined to comment, when contacted yesterday.
There were three outstanding loans to the SBS Bank, plus interest charges to date, which totalled $1.09 million. Associate Judge Osborne found in favour of the SBS Bank, and ordered costs of $7761 and disbursements of $1350.
In separate District Court proceedings last month, Fox (55) was sentenced to community detention and community work, having admitted three charges of theft by a person in a special relationship, being the Fitzroy's pokie venue manager.
She unlawfully withheld more than $20,000 in gaming machine profits, taken over three weeks during January, to provide cashflow for the hotel operations during an otherwise slow trading period, the court heard.
Last year, Mr Mellon and Fox were 50:50 shareholders and sole directors of Glenorchy Lodge Ltd, which they placed in voluntary liquidation in August.
Liquidator Insolvency Management's final report, released on June 30, said it had been successful in negotiating a settlement with an unnamed third party, which allowed a ''substantial amount'' of the IRD's preferential claim to be paid, which was $60,440.
While the liquidator's six-monthly report had estimated $89,000 was owing to unsecured creditors, the final report said there were no further assets to provide a return for those creditors.