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The Honolulu Advertiser
Posted on: Friday, April 12, 2002

Ruling restores workers' salaries

By Dan Nakaso
Advertiser Staff Writer

A Circuit Court judge yesterday ordered the employees of two Maui golf courses to be paid their salaries as part of an ongoing foreclosure dispute involving the state Employees' Retirement System and an Amfac Hawaii LLC subsidiary.

Last month the courses were put under the court-ordered receivership of Joseph Toy, who had asked for authorization to pay employees of the North and South links at Ka'anapali Beach resort for March 30 to April 5. That was the last pay period under Amfac Property Investment Corp. before Toy set up a new company, Receivership Ka'anapali Golf Course LLC, to keep the courses running during foreclosure proceedings.

Amfac Property Investment Corp. contested the move to pay the employees, alleging in court papers that ERS and Toy are trying to break the union and have not paid some severance, vacation pay claims and benefits.

Judge Karen Blondin's order yesterday affects approximately 51 collective-bargaining employees and 18 full-time and three part-time non-collective bargaining employees. All of the Amfac employees who applied for jobs with the new receivership company were hired, according to Tim Canute, senior golf course superintendent for the courses.

The workers "have heard that they're going to get their paychecks," Canute said yesterday. "All the employees are happy that both sides are cooperating and things are going as smooth as can be expected in a situation like this."

The case centers on a $66 million loan that the retirement system, a multibillion-dollar pension fund for Hawaii's state and county government employees, made to Amfac in 1991.

The ERS has had problems collecting interest payments since 1995 and filed a foreclosure suit to take over the two 18-hole golf courses that Amfac had used as collateral for the loan.

Both sides entered into a "standstill agreement" that put the case on hold for six months. When the agreement expired at the end of 2001 and settlement negotiations broke down, lawyers for both sides began filing new motions and foreclosure proceedings have resumed.

In the meantime, the courses fell behind in upkeep. But now, Canute rates them a 7 or 8 on a scale of 1 to 10. "Most of it was superficial," Canute said. "There were lots of weeds and bare spots."

The courses remained open for business, Canute said, and were busy despite the sudden drop in tourism following Sept. 11.

In a reply filed Monday to Toy's request to pay the employees, lawyers for the state Employees' Retirement system said Amfac's claims are misleading and without merit.

ERS said Amfac is trying to make Toy, as receiver, pay for severance payments and accrued vacation benefits that Amfac is actually liable for. The liabilities in question were owed before Toy became receiver, and therefore Toy should not be forced to pay them, ERS says.

Toy was appointed receiver March 19 for the golf courses. They were held outside of the bankruptcy proceedings of Amfac, which filed for Chapter 11 protection from creditors in February.

"As receiver, I am only allowed to disburse funds in accordance with the court order, and that is for expenses that arise after my appointment on March 19," Toy said. "I am obligated by the court to follow its order."

Employees' pay is similar to what it was under Amfac but they have different benefits, Toy said.

Sometime next week, Toy said he intends to meet with representatives of the International Longshore and Warehouse Union over resuming the employees' union representation.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.