HIS hotels have hosted celebrations marking hundreds of special occasions, but Michael Lynch's own fortieth was so completely without fanfare that he claims he can't even remember it.

The big day was less than five months ago but Lynch's memory lapse is understandable nonetheless -- four days after the Clareman saw in 40, his beloved Lynch Hotels was in the High Court petitioning for protection against creditors owed €23m.

The move ultimately paid off, with the hotel group successfully emerging from the court process a few weeks ago. But the examinership and the difficult months leading up to it have clearly taken their toll on Lynch.

Sitting in his spartan Ennis headquarters, the hotelier is almost unrecognisable from the man who, just a few years earlier, brought a gang of journalists to London to rub shoulders with the likes of Keith Wood and Paul Costello in celebration of the Lynch Group's onward march.

Turbulent

Back then, Lynch seemed larger than life, laughing and chatty and completely at ease with the great and the good gathered on the Irish naval vessel bobbing on the River Thames. Now, the hotelier has shrunk visibly and his short sentences are punctuated by long pauses and heavy sighs.

"Any examinership is never certain," he says, recalling the turbulent months of the autumn.

"In your darker moments you do have those worries about failure, but at the end of the day we had a viable business."

His sombre mood reflects the stark facts of Lynch Hotels' rise and near collapse.

The group expanded aggressively in the boom years, growing from two small hotels in the mid-1990s to nine large properties, many of them with leisure centres and conference facilities.

By 2003 Lynch was so confident he was pencilling in a foray into the London market, but the group was soon forced to retrench, buckling under heavy borrowing and annual losses of more than €3m.

Lynch went on to sell two properties in early 2008, booking a loss of €10m as the hotel market floundered, and he brought the group to breakeven by its 2008/9 year after enlisting the help of financial consultant Paul Talbot.

The duo's profit plans for this year were shattered by the recession and by the summer the group was unable to pay its debts as they fell due, prompting three months of examinership for Lynch Hotels and a 90pc write-off for creditors.

Protection

Lynch might be a more subdued version of his Celtic Tiger self, but the Clareman steadily insists his decision to appeal for court protection was the only one he could have made.

"We didn't feel that there were any other options," he says. "It could absolutely have been the final nail, but we felt we had a viable business and there were 500 jobs involved so we felt it was the right thing to do at the time."

A question on whether there was anything Lynch personally could have done to prevent things getting to that stage prompts a long pause followed by a similar reply. "No," he says quietly, "there wasn't."

Some would say, though, that if Lynch hadn't been so keen to expand then the group wouldn't have dropped €10m on the hotels sold as a loss earlier in 2008, losses that were ultimately born by Lynch's creditors.

"You can take two different views," Lynch finally answers. "We built some very successful ventures, but not everything turns to gold."

It is Talbot, the financial consultant who recently joined the group's board, who steps in and fights the company's corner.

"A lot of creditors really benefited from the expansion and enjoyed a lot of trade," he says.

"And the reality is that Michael (Lynch) put almost three million of his own money into the business, the loss to creditors would have been even greater if he hadn't done that, and I think he deserves acknowledgement."

Lynch's reticence to bang the company drum emerges again when the conversation veers into how the hotel group ended up in examinership in the first place.

Unfortunate

Asked about the impact of the Aer Lingus Shannon/Heathrow pullout, the Dell closure and the over-supply of hotels, Lynch refuses to take the bait and launch into a rant against market forces.

It's Talbot who says the group could have paid off its debts in full if the recession hadn't hit "at the worst possible time" when the group was just on the cusp of profitability.

It's the same story once more when it comes to Lynch Hotels' role in housing victims of the recent floods.

The hotelier says the guests are being paid for by the HSE, and when he's asked if that is good for business, he simply replies that it's "unfortunate for the people".

It's left to Talbot to chime in that Lynch Hotels is also providing school buses and lunchtime sandwiches for the children and is donating furniture left over from the sale of Hayden's Hotel to local charities who can distribute it amongst victims.

Examinership

Lynch's reticence slips twice during an hour-long chat -- once when it comes to praising staff, customer and creditor loyalty during the examinership days, and again when it comes to espousing the hotel group's future viability.

Lynch says he personally stood in front of all 500 staff to explain the process to them and was struck by their "extreme loyalty". The hotel group received the same reception from customers -- "within 24 hours of us going into examinership every bride was contacted by their hotel manager and we didn't lose a single wedding" -- and "99pc" of the group's creditors have been "very supportive" and continued their trade.

As for the future, Lynch, who used to describe his hotel group as "the Ryanair of hotels", is sticking with his low prices policy, insisting that he can "absolutely" make money from them.

The group is expecting to see a "proper profit" for the year ended March 2011, and Lynch expects market-wide rates to gradually ease upwards between now and then. Even when the good times flow again, there could be a long wait for Lynch to return to his acquisitive roots.

"The only plan at the moment is to concentrate on the core business, make it as profitable as it can be, I don't see anything beyond that," he says, admitting he's become "more cautious" after his brush with insolvency.

Caution, though, is not to be confused with a white flag.

"I don't feel defeated," Lynch says. "We saw the market was changing, we reacted to that (by selling the hotels), then we significantly turned the business around, then we had to go through a difficult examinership process.

"After we came out of that process, to see the genuine happiness on the faces of staff, it makes it all worthwhile."

- Laura Noonan

Irish Independent