A Greene King tenant is suing the company for more than £230,000 after attempts to lease the pub or buy the freehold failed.
Meadowden Holdings also alleges Greene King breached its own code of conduct by failing to carry out essential repairs or offer support.
Meadowden, operated by Martin Hill, took over the Falcon Hotel in Uppingham, Leicestershire, under a temporary tenancy agreement in May 2008, to allow the pubco time to recruit suitable tenants.
In July 2008 Meadowden submitted its own business plan to take over a new 15-year lease of the pub, which included £300,000 in a joint investment from both landlord and tenant.
In October of the same year, while negotiations were ongoing, Meadowden agreed to sign a five-year tenancy agreement, believing it offered more security than its original temporary arrangement. Over the next three months plans to buy the 15-year lease stalled and in February 2009 Greene King instead offered Meadowden the chance to buy the freehold.
The pubco then accepted an offer of £900,000 and outlined a timetable for completion by May 2009.
A document provided to Kettering County Court, Northamptonshire, by Hill, seen by the Morning Advertiiser, stated: "Between May 2009 and May 2010 the completion process has completely failed, incurring the defendant costs of £257,712 due to differential of tenancy agreement v freehold.
"The business has gone a further two years without any investment from Greene King in its infrastructure and quality of the building, resulting in several hotel rooms becoming unusable."
Hill alleges essential work on drains, utilities, electrical wiring, heating and damp were not carried out.
Response
A spokeswoman for Greene King said: "We are currently involved in a legal action proceeding in Kettering County Court with Mr Hill and are therefore unable to comment on this matter.
"However, we can confirm that we had reached an agreement to sell the hotel to Mr Hill for an agreed sum that reflected the
work Mr Hill anticipated would be required. Mr Hill then later withdrew from the sale."