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ATALPAC-ANDINA |
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Non
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Economic Consultants to small
and midsize companies
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T A L P A C
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...Since 1966 |
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Reorganisations [One Example]
Days Inns of America was, at the time we were contacted by Cecil and Lon Day, the world's 7th largest hotel chain, and the very fastest growing. At the height of a global economic downturn Days Inns had 30% of their hotels under construction financing (which is high interest and short term) and none of their bankers and usual funding sources were prepared to give permanent financing on these properties (mortgages, hipoteks). Corporate liquidity was the fatal issue, the cash flow would leave the company in default within a month of our initial meeting. We convened a gathering for that week end to provisionally reorganise the company. In attendance with us were all of the Days Inns Atlanta directors and |
executive staff, plus the accounting firm and Donley Smith, corporate counsel. Accounting procedures had not been changed since the company's creation in 1970, so we took advantage of the regulation which permits a company to change its procedures once annually, and liberalised everything within the limits of the regulation. This permitted us to recapitalise some assets, change depretiation write-off schedule on others, capitalise good will, defer certain liabilities out of the 'current' categry. Monday we called in a number of the largest non bank unsecured creditors and persuaded them to temporarily capitalize their debt by accepting title to some of the unmortgagible properties. Tuesday we boarded a plane for one of the financial capitals of Europe, taking with us the company's new balance sheet, including a 'brown jacket' |
partners opinion from a big eight auditing firm. In Europe wealthover provided collateral and pledges adequate to secure a revolving credit facility equal to roughly a quarter of Days Inns' monthly turnover. At the same time another team of wealthoverrs were presenting Days Inn's directors with a choice: "Either slash franchise prices for lots of the millstone hotels to get them off of Days Inns balanse sheet and accept an internationally recoginsed professional CEO or else let us do a settlement with your creditors which will give you short term relief from creditors, but greatly harm your reputation with banks and Wall Street". Cecil Day accepted our recommendations and the rest is history. Now Days is part of the Wyndham Hotel Group. |
