McDonald Vague The Insolvency & Business Recovery Specialists

HOSPITALITY

Our Hospitality Team

Our hospitality specialist team has a wealth of experience in the industry and proven commercial acumen. Our team consists of Boris Van Delden, Roy Horrocks, Tony Maginness and Peri Finnigan.

Boris van Delden and Roy Horrocks have played key roles in the successful restructure and sale of a number of hotels, bars, restaurants and accommodation complexes for New Zealand's leading breweries and lending institutions.
In the beer industry, market share and brand profile is paramount. Protecting the pourage rights insures a competitor doesn't take over the site. We have a track record of restructuring premises for the debenture holder so the business can be sold as a going concern which saves the investment and protects the brand profile.
With his past experience as a lending manager at North South Finance, Tony Maginness has had first hand experience lending to luxury resorts and knows how difficult these loans are to recover when the discretionary dollar dries up. He was involved in completing Doubtless Bay Villas in Northland and restructuring the management so that unit holders received a more equitable return He also negotiated the sale of the residual land to Carrus Corporation at a figure in excess of the valuation.

Our Hospitality Experience

We have acted as receivers for boutique hotels and luxury lodges. Often these hotels and lodges have spectacular locations, but are isolated, and as a result occupancy is low and overheads high.

The recent property boom and easy credit conditions have resulted in an over supply of these types of properties scatted around the country. Since the credit crunch it has become a buyer's market and these properties have become almost impossible to sell.

We have assisted the mortgagee by focusing on profitability rather than an immediate exit in this depressed market. This allows the asset to be held until the market improves and can in many cases zero rate the property for GST purposes.

This requires the financier to wrestle control from the borrower by appointing a receiver. In this situation McDonald Vague would appoint an experienced manager and implement strategies to make the operation profitable and at the same time look for potential buyers.

We have a network of trouble shooting managers that we can place in a business. It is important that they are incentives correctly to stay focused by remunerating them based on the bottom line. This will increase turnover and at the same time reduce wastage and pilfering.

Our focus is to act quickly, make commercial decisions, put in controls, report, and implement the correct strategies and then exit. This saves the financier/ debenture holder money and causes the least disruption to the business.
McDonald Vague's specialised skills, contacts and understanding of the industry achieve the best result for secured creditors.

• We have the ability to quickly take control of a situation and deploy resources as necessary.
• Our team has the ability to manage both the operational and financial aspects.
• We are able to quickly identify risks and implement the appropriate controls.
• We have an innate understanding of the lender's/ debenture holder's needs.
• We have a high level of knowledge, expertise and technical skill related to the hospitality sector.
• We understand how to work with the media to protect reputation and brand value.

Our team has extensive experience managing projects with:

• Hotels
• Bars
• Services apartments
• Boutique hotels
• Camping grounds
• Backpackers
• Hostels

Network of Contacts

We have a network of nationwide professionals to call on:

• Valuers
• Real Estate Agents/ resort brokers
• Experienced hotel managers
• International hotel marketing organisations
• Breweries
• Buyers

Hospitality Case Study - Danben Holdings Ltd

Background

Danben Holdings operated the Meeting Irish Ale House in the premises of the up market Emerald Hotel in Gisborne where it was a tenant.

The resources required to establish a high class business from scratch including infrastructural costs, meant that the owners found themselves struggling to meet financial commitments soon after the business opened. The business operated a poker machine lounge and had an established quiz night that filled the pub every Tuesday evening.

The pub was and still remains the best theme pub in Poverty Bay.

Why was McDonald Vague brought in?

McDonald Vague was brought in initially to conduct an investigating accountant's review, to establish whether the bar was profitable and could pay its debts as they fell due. All indications from the secured creditor led us to believe that the business was in trouble. We were required to ascertain where the funds were going.

What did we do?

McDonald Vague discovered that the business was profitable on a day to day trading basis. The problem was soon identified as a massive debt burden carried forward from the establishment costs. When the financing payments were taken into account on a cash flow projection the business would prove not to have a positive cash flow in any month for the foreseeable future.

After protracted negotiations with the directors, they were given several chances to
re-finance the business or conduct a successful sale to a less encumbered party, both of which failed. The secured creditor appointed McDonald Vague to operate the business in a trading on receivership until such time as a successful buyer could be found.

As receivers, McDonald Vague traded on the business successfully for twelve months. Considerable interest was generated over that period by means of a profile given to interested parties and the use of selected real estate brokers.

Several deals were put in place but inevitably did not succeed as financing arrangement for business purchases from banking institutions started to tighten.

Outcome

The bar was successfully traded by the receivers and was eventually sold to an acceptable party that returned a significant debt to the secured creditor and fully protected its other rights and interests in the business.

Contact Us to Discuss Your Situation

Due to our in-depth experience of the hospitality industry, Donald Vague's specialist team can hit the ground running, swiftly assessing the situation with practised eyes, deploying resources without delay, taking control of management and finances and, most importantly, delivering fast, tailored results to the maximum benefit of all parties.