Aloha Tower to pay debts
By Andrew Gomes
Advertiser Staff Writer
A representative of Aloha Tower Marketplace yesterday told creditors in the center's bankruptcy case that the marketplace owner expects to fully pay all but one of their claims, but that doing so could take awhile because of a dispute with the state.
Jon Miho, vice president of the partnership that owns the shopping complex at Honolulu Harbor, also said owners are willing to invest more money in the center, but again that's contingent on resolving the dispute over its lease with the state.
Aloha Tower LP filed Chapter 11 bankruptcy in January, after four years of losses and difficulty in correcting a parking deficiency at the marketplace it bought out of bankruptcy in 1998.
Assets were listed at $33.6 million; debts were listed at $84.3 million.
Miho said the partnership's general plan to reorganize its finances is to pay less rent to the state and provide additional parking that would attract more customers and tenants. Except for the state, all unsecured creditors can expect to be paid in full, he said.
About 70 unsecured creditors — mostly Hawai'i business and service providers — are owed a total of about $630,000. Aloha Tower Development Corp., the state agency acting as marketplace landlord, is owed the most, $199,000.
An Aloha Tower LP partner maintains the rest of the partnership's debt, $83.7 million, which includes the original value of the marketplace mortgage acquired at a discount.
The partnership is willing to invest more money in the marketplace to help improve operations, but not until it can resolve the parking problem and rent issue with the state, according to Miho. "We see no future for the shopping center under the current circumstances," he said.
Miho said filing bankruptcy was necessary to prevent the state from canceling the marketplace's ground lease at Piers 9 and 10. He said Aloha Tower LP stopped making lease payments in October after it could not obtain reduced rent from the state.
Aloha Tower LP blames the state for contributing to the marketplace's financial trouble, according to a lawsuit the partnership filed in December charging that the state's unwillingness to approve a number of different parking proposals inhibited successful operation of the center.
The suit, which seeks more than $10 million in damages, was withdrawn because of the bankruptcy filing. But Aloha Tower LP's bankruptcy attorney Jim Wagner said he plans to file a similar action in bankruptcy court next week. He also said Aloha Tower LP will not pay rent to the state until the dispute is resolved.
Other marketplace vendors will continue to be paid for post-bankruptcy goods and services, Miho said.
David Louie, Aloha Tower Development Corp. board chairman, declined to comment on the allegations made by marketplace owners.
Aloha Tower LP argues that the parking shortage has discouraged major tenants from opening stores at the marketplace and has created a need to reduce rents. It has also said the state refused to make good-faith efforts to direct cruise ships to dock at Aloha Tower piers, and converted a ferry terminal to another use that does not generate significant customers for the center.
Miho has said that past annual operating losses averaged $1.6 million, and that losses are projected to increase to $200,000 a month because of recent store closures, tenant bankruptcies and deferral of store rent.
According to a report recently filed with the court, the marketplace had an operating loss of about $103,000 in January.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
