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The Tokyo District Court decided Tuesday to launch rehabilitation proceedings for the failed Dai-Ichi Hotel Ltd. and four affiliated companies under the auspices of Hankyu Corp., an Osaka-based railway operator.

The court appointed Hankyu President Taro Ohashi and lawyer Hideo Seto as trustees of the Dai-Ichi Hotel group.

The trustees will work out a rehabilitation plan for the group through talks with creditor banks and other parties concerned by July 2001 for submission to the court.

Hankyu is expected to provide 2 billion yen to 3 billion yen in support for the hotel chain operator.

Dai-Ichi Hotel filed with the district court in May for protection from creditors under the Corporate Rehabilitation Law with liabilities of 115.2 billion yen.

At a press conference in Tokyo after the court’s decision, Ohashi said Hankyu will support Dai-Ichi Hotel because the Tokyo-based hotel chain and Hankyu’s hotel chain, based in Osaka, can supplement each other’s operations.

Besides, Hankyu has long maintained close ties with Dai-Ichi Hotel, Ohashi said.

“The hotel industry is currently facing a difficult situation. In order to continue the business (of Dai-Ichi Hotel) in the future, we will thoroughly examine the hotel chain’s management and must transform the firm into a new operation,” Ohashi told reporters.

The late Ichizo Kobayashi, a founder of the Hankyu business group, helped establish Dai-Ichi Hotel, while Hankyu Corp.’s business group also runs hotel chains.

Dai-Ichi Hotel’s difficulties surfaced as a result of the expansive business policy it pursued during the bubble economy, which burst in the early 1990s.

Hankyu is Dai-Ichi Hotel’s second largest shareholder following Shinsei Bank, formerly the Long-Term Credit Bank of Japan.

Other entities, including the U.S. investment group Ripplewood Holdings, have also expressed interest in assisting Dai-Ichi Hotel. Ripplewood headed the consortium that bought the failed Long-Term Credit Bank of Japan.