Hotel operator Le Méridien has been put in to the hands of its bankers after breaching bank covenants and slumping in value to below the level of its debts.
The company was bought from Compass two years ago for £1.92b by a consortium led by financier Guy Hands.
A spokesman said the group had been hit by "a series of external shocks" since its acquisition in May 2001, just months before the 11 September terrorist attack hit the global hotel market. Since then, business has continued to be damaged by recession, the Iraq war, and now the Sars epidemic.
The company, which makes profits of about £60m a year, has seen its value drop to £700m, well below its liabilities of £1b.
The biggest losses have been borne by the Royal Bank of Scotland and Japanese bank Nomura, which have written off £100m and £213m respectively. Other leading stakeholders include private equity group Alchemy Partners, Abbey National, CIBC World Markets, Merrill Lynch and Lehman Brothers.
A syndicate of 20 banks has called for a meeting on 19 May with Le Méridien's chief executive Stephen Alexander to discuss a rescue plan. Other options could include bringing in new management or an administrator.
In March the group, which operates more than 140 hotels in 55 countries, announced it was seeking to raise €300m (£207m) to pay off debt through the sale of some of its hotels. Last Friday it sold the Ritz in Madrid to Spanish investment company Omega Capital for g125m (£86.1m) and earlier this month it sold three UK properties to Quintessential Hotels and the Feathers Group for a combined £46m. It also concluded a sale-and-leaseback deal on its Barcelona property.