Star players were looking to leave and no one knew who the next owner would be, or even if the team would remain in New Orleans long term.
Williams kept his focus on coaching, and has been rewarded with a four-year extension running through the 2015-16 season.
"The problems we have in the NBA are really good problems to have," Williams said in a phone interview with The Associated Press on Sunday, the day the club announced his extension. "I would have loved to have all the ducks in a row and all the other good things everybody else had in their organizations, but that just wasn't my reality and at the same time my job hadn't changed and my players needed me to be focused on my job."
The new deal comes as the 40-year-old Williams heads into the final year of the first head coaching contract he signed in 2010.
The Hornets didn't release contract terms. Williams confirmed the length of the extension, but declined to discuss his pay other than to say, "It's more than I deserve."
Williams took the Hornets to the playoffs his first season with a 46-36 record. Last season, the club went 21-45 after trading star Chris Paul to the Los Angeles Clippers in a deal that helped New Orleans build for the future with the acquisition of 23-year-old shooting guard Eric Gordon and an additional first-round draft choice.
The Hornets then won the NBA's draft lottery, selected Kentucky star Anthony Davis first overall and added Duke's Austin Rivers with the 10th pick.
This off-season, the Hornets have traded to acquire forward Ryan Anderson from Orlando and centre Robin Lopez from Phoenix.
"The Hornets have a promising future and an exciting young nucleus," said Hornets executive vice-president Mickey Loomis. "It is our opinion that Monty is the perfect coach to develop and lead this group of talent going forward."
Loomis, also the general manager of the New Orleans Saints, was placed in his oversight position with the Hornets after Saints owner Tom Benson bought the basketball team from the NBA, ending a period of ownership uncertainty that had made it difficult for Hornets general manager Dell Demps to acquire or keep established players in free agency. Forward David West cited the lack of a long-term owner as a factor in his decision to leave New Orleans for Indiana in free agency last year.
Williams said Loomis initiated the extension talks.
"When he did that I kind of felt like when the older guys used to pick me to play on their team," Williams said. "It just made me feel like they're putting a lot of trust in me. Mr. Benson has told everybody that he's confident in our ability as a coaching staff. I just felt really good about that."
Williams came to the Hornets after five seasons as the assistant coach in Portland under then-head coach Nate McMillan.
Williams played in the NBA for 10 years after the New York Knicks made the former Notre Dame standout a first-round pick in 1994. His playing career also included stints with the San Antonio Spurs, Denver Nuggets, Orlando Magic and Philadelphia 76ers.
The Hornets hired Williams when the club was up for sale by founder George Shinn. During his first season, the NBA stepped in to buy the club in hopes of stabilizing club finances and orchestrating a deal with a new, permanent owner committed to keeping the team in Louisiana long-term.
At the time, Williams' peers would often say they felt sorry for him having to start his head coaching career amid such instability, but Williams never complained, saying he felt lucky to be getting paid well to do something he loved. His players routinely professed their admiration for Williams' approach and always seemed to play hard for him.
Even as the end of last season approached, with the Hornets well out of the playoff hunt, they finished with eight victories in their final 13 games.
It was around that time that Benson agreed to buy the Hornets for $338 million and also agreed to a lease extension through 2024 at the New Orleans Arena. Soon after, Benson and Loomis said they planned to retain Williams.
"We could not be any happier to have someone of Monty's quality __ both professionally and personally __ involved in the resurgence of this franchise," Benson said.
The Hornets have begun moving corporate offices into a newly renovated building that also houses the Saints headquarters and Benson is looking into building a new practice facility on that campus.
After two challenging seasons, Williams is now looking at a future that includes stable, deep-pocketed ownership, an infusion of new talent, facility upgrades and enhanced job security.
"For me to say that's not good for the organization or the team would be a lot of fake humility on my part. I think it's great for all involved and shows Mr. Benson and Mickey have a vision for the organization that's bigger than all of us," Williams said. "We've had some really good things happen ... yet we haven't won anything, so that is where my reality remains. I want to win. All the stuff that we're getting is a bonus."