BACKGROUND OF TEAM FORMATION　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　Japanese

■　HOME 　｜Message for Restructuring Funds｜Team Profile｜Mareting Network ｜

« concept

« due diligence
　

« consulting

«HR management

« operation

« company

　　

ENCOUNTER WITH AN INTERCONTINENTAL PROJECT

In 1999, a major hotel in a famous resort place, became delinquent with its loan payments. The hotel was facing financial difficulties and could not make its monthly obligations due to the fact that their profits were used to cover the deficit of other group companies. Furthermore, the hotel was not able to compete with the local competition because they could not afford the cost of the necessary renovation work. Finally, an extra-ordinary appreciation of the yen against the U.S. dollar worsened the situation by inflating the remaining debt. Although the loan agreement promised an automatic renewal, the bank itself was facing a financial crisis and could not hold a meeting to negotiate a renewed terms and conditions. In the course of time, the entire Japanese banking industry plunged into a nation-wide restructuring movement, and the debt, labeled as a nonperforming loan, underwent a fate of repeated acquisitions and transfers before finally being sold to Resolution and Collection Corporation (RCC).

STRONG TIES WITH THE LOCAL COMMUNITY

It deserves a special mentioning that while many of the local hotels were either merged or acquired by huge capital, this hotel maintained its local ownership and management style for over 30 years. The hotel was admired by the local economy not only because of its history, but also because of its numerous contributions to the local community. These contributions included providing over 1000 employment opportunities, financial support for ongoing welfare activities in conjunction with various medical societies and organizations, and offering on-the-job training classes to support the educational programs of local schools. Its close relationship with the local residents and their economy gave the restructuring of this hotel an extremely important value and significance.

A COMMUNITY-BASED TURN-AROUND

Our sense of mission when we first started our restructuring work was that we had to save this hotel because of its major contributions to the local community. None of us had the slightest idea that our challenge would last for almost five years. This long struggle was due to a series of unexpected events such as 9/11, conflicts in the middle east, and SARS outbreaks in Asia. These events caused the local tourist industry to suffer a drastic decrease of visitors and cancellations of reservations. The damage incurred by the hotel was relatively greater than other hotels in the area because of a decline in its competitive strength, along with the depletion of its cash reserves. These factors caused the property and business values to drastically decline, and its collateral value was severely damaged. As a result, the hotel faced the possibility of selling their business.

Overcome with overwhelming uncertainty and pressure, our team was pushed into a corner where we had no choice but to fight back by bringing our full strength and energy together. Inspired by both the general manager who personally led the organization, and the staff that tackled difficult tasks without complaining, we decided to renew our sales and marketing strategy by conducting a survey that would give us a better idea of customer needs and other requirements. Meetings were held night and day, and all the different financial schemes and scenarios that might save the hotel were thoroughly discussed. The necessary maintenence and renovation work was carried out by utilizing all the resources that were found in the hotel warehouse. The freezing of pay raises was accompanied with individual discussions with the employees, asking for their cooperation and understanding by disclosing the management plan to overcome the crisis. In order to successfully execute the execution plan, it was necessary for us to share the status of the hotel with every stake-holder, and to properly coordinate and unite the team of outside experts who had a variety of backgrounds, experiences, knowledge, and expertise.

COMBINATION OF TEAMWORK AND SKILL SET

Faced with a huge number of tasks such as repeated analysis of our restructuring scheme, conducting a business value appraisal and a needs assessment for renovation, negotiating with financial institutions, reviewing the existing legal framework for possible advantages, coordinating the actions of outside experts, etc., we hardly had a chance to breathe. Each member of our team took full responsibility for the completion of the assignments and tasks allocated to them, and the bailout of the hotel was finally accomplished. Our patient lawyers worked very closely with us throughout the intense negotiation process with various banks and RCC.

Without their sincere and faithful support and encouragement, we would not have been able to achieve our goal. When our project was in deadlock due to the worsening situation of terrorist attacks, the middle east crisis, and other unfavorable outside factors, the whole endeavor may have failed had it not been for the encouragement of our chief attorney who stood firmly with us at the time.

BASIC CONCEPT OF OUR TURN-AROUND

Through these invaluable experiences, we were able to familiarize ourselves with the framework and the fundamental principles required for business restructuring. We would like to utilize our expertise to contribute to the restructuring of troubled hotels and inns suffering all over Japan, and reactivate the regional economies where these hotels and inns reside. Our approach to business restructuring does not simply aim for a temporary solution through a cosmetic improvement of the balance sheet, but instead aims for a turn-around of the on-site management and operation. To this end, we have formed a team of experts whose wide range of know-how and intercontinental strategy that can make the turn-around projects that we undertake to become internationally sound.