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May 20, 2016

The Hospitality and Leisure Group advised a lender to a 6,000-acre, master-planned resort community located in Baja California Sur, Mexico.

Client Mandate
The Hospitality and Leisure Group advised a lender to a 6,000-acre, master-planned resort community located in Baja California Sur, Mexico. This beach front community includes a 150-room hotel, an 18-hole Duval-design golf course, resort amenities and a substantial, multi-phase “vacation–home” homebuilding operation. At the time of A&M’s initial involvement, the resort was owned by a syndicate group of investing partners (Company) led by a Money Center Bank. The economic downturn in 2008 drastically impacted the sale of home sites, which reduced operating cash flow and triggered material breaches of loan covenants. The lender syndicate gained control of the asset and eventually commenced foreclosure proceedings in May 2010.

A&M’s Approach
A&M was initially engaged in a creditor advisory role but transitioned into the role of Chief Restructuring Officer (CRO) as the consortium of lenders assumed control of the asset. As CRO, A&M assumed responsibility for day-to-day operations of the resort and designed and implemented a comprehensive restructuring plan. In compliance with the federal and state laws of Mexico, A&M led the process of “Concurso Mercantil”, the Mexico equivalent to a U.S. bankruptcy filing. During the bankruptcy proceedings A&M addressed material tax liabilities, and coordinated legal representation and communication among stakeholders. A&M leveraged our EVN Partner, Cushman and Wakefield, to support lot / asset sales.

The Hospitality and Leisure Group professionals developed and implemented a wind down plan for all lodging and construction operations. The plan involved asset security, employee terminations, relocation of books and records, public relations management and third-party vendors and contractor negotiations. A&M coordinated efforts with Mexican federal and local governmental authorities who had oversight authority over the operations of the resort and its assets (including FONATUR, Mexico’s Tourism Investment Trust). A&M also supported the disposition of Company assets, which resulted in an eventual sale to a publically traded Mexican company.

The A&M Advantage
This case study exemplifies the Hospitality and Leisure Group’s strategic, financial and operational heritage. A&M was adept at developing a resolution plan that met the approval criteria set forth by the lender consortium. The Hospitality and Leisure Group professionals then turned their attention to implementation, which included the day-to-day operations of the resort, oversight of hospitality and construction departments, maintaining the books and records of the company, preparation of interim cash flow reports and forecasts, budgets, reports and other accounting / financing information, resolution of tax audits and resolution of the Company.

Throughout the resolution process, the Hospitality and Leisure Group managed and negotiated all disputes and settlements with sales agents, homeowners, contractors, vendors, consultants and other third parties. The Hospitality and Leisure Group’s work resulted in a full wind down of existing operations and sale of the Company.