However, Auckland developer Mike McGurk, of Oasis Properties, is adamant he will refinance and continue with his plans for a between $8 million and $10 million refurbishment, despite having debts called in by Hanover Finance.
The 125-year-old building joins its neighbour, the 1930s former chief post office of Dunedin, which is also on the market under mortgagee sale.
The buildings' respective tenders close on March 25 and April 1.
Mr McGurk was contacted yesterday and said "most of his financing was with Hanover".
The finance company is itself embattled.
Mr McGurk said Hanover Finance was "calling in everything [loans]".
"We will pull it [the BNZ building] off the market. We owe very little on it," he said.
The BNZ was refurbished in 2002 for use by the High Court and Dunedin District Court while the historic Stuart St court building was being refurbished, but has otherwise been vacant since 1999.
In 2003, United Kingdom businessman Barry Brookes, who owned the BNZ property for about 10 years, proposed a $4 million project to develop 11 apartments, but found it too difficult to oversee the development from abroad.
In April 2005, Mr McGurk announced plans to turn the BNZ into a four- to five-star 130-bed hotel and restaurant, worth between $8 million and $10 million.
Yesterday, Mr McGurk said refinancing was being sought and the original estimate of spending required for redevelopment was still a "reasonable" figure.
A McDouall Stuart finance companies report late last year said the defaults of Hanover Finance, Dominion Finance, North South Finance, St Laurence, Dorchester Finance, Strategic Finance and United Finance had decimated the sector.
Of the $3.8 billion of debenture money at risk in distressed finance companies, almost $3 billion was tied up in property lenders, said head of research John Kidd.
Hanover Finance, owned by Eric Watson and Mark Hotchin, has a restructuring plan under way to repay $462 million owed to investors during the next five years, while continuing as a property lending business.
Mike Elford, of Edinburgh Realty, said the 978sq m former BNZ building site, on two titles, had a capital value of $1.5 million. Its condition was one of the best among historic buildings in Dunedin, he said.
When told of Mr McGurk's plans to get the building back, Mr Elford said there had already been "a lot of interest" in the building.
Hanover Finance "had made it clear they wanted to crystallise a sale as soon possible", and he thought a buyer could be announced by April 1, when tenders closed.
Just 14 months ago the Exchange area in central Dunedin appeared poised for a renaissance.
Several hotel development projects worth more than $35 million collectively were proposed, which would have added hundreds of visitor beds and jobs to the city's hospitality sector.
However, plans for the chief post office to become a Hilton Dunedin worth $80 million had foundered, and South Canterbury Finance had forced a mortgagee sale to recover more than $7.5 million owed by Auckland developer Dan McEwan, who has been bankrupted over a separate $978,000 debt elsewhere.
Also on the drawing board at the time was an application by Auckland-based CP Group for construction of a six-storeyed, more than $5 million annexe, next to the former 125-year-old Wains Hotel on Princes St, which has not progressed.
