Bankruptcy filing by Savio shifted to Chapter 7
By Andrew Gomes
Advertiser Staff Writer
The personal bankruptcy case of Hawai'i developer Peter Savio has been converted from a Chapter 11 reorganization to a Chapter 7 liquidation.
A bankruptcy judge earlier this week appointed trustee Mary Lou Woo to oversee the distribution of about $7 million in assets to creditors owed nearly $33 million.
The conversion was requested in August by creditor Central Pacific Bank. Neither Savio nor other creditors in the case objected to it. Bankruptcy Judge Lloyd King approved the request two weeks ago and issued the order Nov. 2.
Savio filed the bankruptcy petition along with his wife, Phyllis, in February to delay Central Pacific from evicting one of his companies, Savio Realty Ltd. Better Homes & Gardens, from its University Avenue offices that he owned personally.
Savio said in court filings that he believed efforts to reach a settlement with the bank on its secured claims of $4.3 million would result in a reorganization plan supported by other creditors. But a settlement could not be reached, and the bank sought liquidation of Savio's personal assets.
Among the other largest secured creditors are American Savings Bank, owed $2.6 million; City Bank, owed $2.2 million; and four other lenders owed a total of $2 million.
"A reorganization would not have been feasible without (Central Pacific's) consent," said Chuck Choi, an attorney representing Savio.
The bankruptcy filing stems from financial troubles linked to Savio's development firm, Savio Development Co., which filed for bankruptcy protection in January 2000, listing $50.5 million in debts and $45.8 million in assets.
Savio Development is disposing of assets under a Chapter 11 liquidation plan. To protect other assets, Savio also filed for Chapter 7 liquidation for holding company Savio Inc., which was one of Hawai'i's largest companies with about $135 million in revenue last year.
Savio Development bought leasehold apartment rental units, converted them to fee-simple ownership and sold them at below-market prices. The firm often arranged second mortgages to help buyers qualify for purchases.
The company got into trouble in the early- to mid-1990s when 100 to 150 loans it made, representing $5 million to $6 million, went bad as falling real estate values and 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.
Most of the creditor claims in the three Savio bankruptcy cases are overlapping, according to Choi. He said that after creditors liquidate their collateral, outstanding claims against the Savios personally should be less than $15 million.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
