Spa Malama files Chapter 11

By Andrew Gomes
Advertiser Staff Writer

High-end spa operator Malama Salon & Spa Ltd. has cut back on expansion plans and filed for Chapter 11 bankruptcy protection after losing an investor who had committed to helping the popular 2-year-old Honolulu chain double in size.

Malama, a local licensee of Minneapolis cosmetic company Aveda Corp., filed for bankruptcy reorganization Wednesday, estimating assets at $2.5 million and debts at $5 million.

Company spokeswoman Mona Wood said Malama, which opened two luxury spas in Manoa and Ala Moana Shopping Center in late 2000, said business will continue without disruption and the company's 93 employees will not be affected.

"We anticipate our reorganization to be seamless and expect a positive outcome," Malama owners Mary and Max Suiter said in a joint statement.

Wood said the two locations have been profitable, often with more appointments than can be accommodated. But the Suiters, she said, were forced to use revenues to pay for construction of two additional locations, in downtown Kailua and the Halekulani hotel in Waikiki, after a friend of Max Suiter withdrew a commitment to pay for the expansion three days after the Sept. 11 attacks.

"You can't just keep taking money from those two operations," Wood said. "That's going to catch up with you eventually, and it did."

Wood said the Halekulani spa, in the early stages of construction, will be completed. Malama has filed a motion in bankruptcy court to reject its lease for the Kailua store, which would cost an estimated $900,000 to complete and begin doing business.

Wood said a reorganization plan has not been formalized, but may involve finding new investors to help pay debts and complete construction of the Halekulani spa. Aveda has agreed to provide $260,000 in emergency financing to Malama.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.