Developer Savio back with new firm

By Andrew Gomes
Advertiser Staff Writer

Hawai'i developer Peter Savio formed a new company earlier this week to take over where he left off with Savio Development Co., which after 20 years is being wound down in a liquidation plan under Chapter 11 bankruptcy.

Peter Savio said he plans to continue under Hawaiian Island Development Co. Advertiser library photo • May 5, 1996

Since 1981, the company has bought about 3,500 leasehold apartment rental units, converted them to fee-simple ownership and sold them at below-market prices to individual owners. The firm often arranged second mortgages to help buyers qualify for purchases.

Savio Development got into trouble in the early- to mid-1990s when 100 to 150 loans that the company made, representing $5 million to $6 million, went bad as falling real estate values combined with tough economic times left customers unable to pay their mortgages or sell their property without taking a loss.

Customer defaults led Savio Development to default on loans with its lenders.

For the past 10 months under a court-sanctioned process, Savio has been working to pay back secured creditors (mostly banks) by selling hundreds of unsold condo units to home buyers, as well as returning property and transferring second mortgages to lenders, according to court filings.

Savio said he also pledged his brokerage commission on the estimated $30 million sale of Palmyra Atoll as well as the assets of Queen Emma Gardens, which he bought and resold under a separate company.

Jerrold Guben, Savio Development counsel, said the inventory sales and loan transfers are expected to be finished this summer.

How much the liquidation raises won't be known until sales are completed.

But Guben noted that it could be less than the $45.8 million in estimated assets because assets were reported at book value, or the value of the property when it was bought many years ago.

The process is part of a proposed plan of "liquidation reorganization" provided for under Chapter 11, a section of the bankruptcy code typically used to restructure companies like Liberty House, the local retailer that emerged from bankruptcy last month.

"It's an orderly liquidation of the property vs. rehabilitation," Guben said.

Savio said he plans to continue development activity under Hawaiian Island Development Co. Inc., which he registered with the state Wednesday.

"I have to liquidate the assets and start over," he said. "The market's coming back. I just have to buy some buildings and convert them."

Savio still has to deal with a case of personal bankruptcy, which he and his wife filed in February listing debts of around $45 million and assets of between $1 million and $10 million.

Savio Realty Ltd. Better Homes & Gardens, another Savio company, is not affected by either bankruptcy filing.

Savio Development's largest creditors are American Savings Bank and First Hawaiian Bank, which are owed an estimated $3 million to $4 million each.

Other creditors owed between $500,000 and $1.1 million include David Basque, Central Pacific Bank, Finance Factors Ltd., International Savings & Loan, Kona Properties Inc., Pioneer Federal Savings Bank and Swire Properties.

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com.