California firm would run Hawaiian Palisade plant
By Andrew Gomes
Advertiser Staff Writer
Hawaiian Palisade Homes Inc. has filed a motion in bankruptcy court to authorize a sale of the failed company's assets to a California firm that wants to resume operations of the factory-built home manufacturer.
In the filing, the Chula Vista, Calif.-based Westlink Group said it is interested in paying up to $1.5 million for all of Hawaiian Palisade's assets, including the homebuilder's Kapolei factory and its partially built houses.
Westlink Group also proposes paying $34,000 in back wages to Hawaiian Palisade workers, and employing Hawaiian Palisade President Art Smith for $10,000 a month, plus up to 14 percent of company stock after four years if sales goals are achieved.
The deal would be subject to negotiating a binding purchase agreement and financing.
The court filing comes after creditors forced Hawaiian Palisade into bankruptcy in June. The company ceased operations last month, leaving roughly 150 customers without their homes. The bankruptcy recently was converted from a Chapter 7 liquidation to a Chapter 11 reorganization.
Westlink Group Chairman D. Edward McGawley was in Hawai'i yesterday but not available for comment, according to a company representative who declined to say anything about the proposed sale or Westlink's business operations and how it would finance a purchase of Hawaiian Palisade.
Westlink Group is affiliated with Westlink Construction Inc., a California company incorporated in September 2001 and run by Mike Leraas, its president, along with attorney Mark Talley, certified public accountant Robert Shishino and Danial Keenan.
Hawaiian Palisade attorney Steven Geshell of Hawai'i Kai was unavailable for comment yesterday. Smith could not be reached.
"I am informed by Westlink Group that they are ready to close the sale of the business as soon as possible so they can start operating the business in a Chapter 11 (reorganization) proceeding," Geshell stated in last week's court filing.
Hawaiian Palisade had a recorded message on its phone yesterday, telling callers: "The company has been sold and we will resume operations within the next few weeks. All outstanding obligations will be taken care of in a timely fashion."
No hearing has been scheduled to discuss the proposed sale of Hawaiian Palisade to Westlink Group.
As creditor, Central Pacific Bank yesterday filed an objection to Hawaiian Palisade's sale request. Details of the objection were not immediately available.
Any sale would be subject to approval by creditors, with whom Westlink would have to reach a repayment agreement.
Hawaiian Palisade's 20 largest unsecured creditors are owed about $2 million. They include the Internal Revenue Service, with a roughly $390,000 claim, and seven customers who deposited between $55,000 and $110,000 each. Secured creditors are owed at least $1.5 million.
Westlink projects initially repaying about $100,000 a month in debts, for a total of about $1.5 million after the first year and about $4.4 million after three years, according to Hawaiian Palisade's filing.
Westlink said it is prepared to contribute an undisclosed amount of operating capital to restart the business, and should be able to build 710 homes in the first year, for $50 million in total projected revenue.
Losses are projected at $4 million over the first seven months of operation, followed by about $11 million in net profit over the next five months, for first-year earnings of $7 million.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
