Kiahuna sale took complex turns
By Andrew Gomes
Advertiser Staff Writer
The sale last week of a Kaua'i golf course by a company headed by local developer Bert A. Kobayashi resulted from negotiations involving a trustee trying to recover assets of former Hawai'i hotel and golf course owner Sports Shinko (Hawaii) Co. Ltd.
As reported Tuesday, nine Kaua'i residents bought Kiahuna Golf Club for $4.5 million. But Kobayashi's KG Holdings LLC first sold the course and surrounding property for $10 million to an Oregon investor who then resold part of the property — the course, clubhouse and equipment — to the residents as part of a "double-escrow" transaction.
The sale to Oregon investor David Resnick's company, Kiahuna Fund LLC, was nearly four times the $2.8 million paid by KG Holding for Kiahuna in January 2002, days before Sports Shinko Hawaii's parent company in Japan was forced into the equivalent of bankruptcy.
Resnick's purchase resolved a lawsuit he filed against a Sports Shinko Hawaii affiliate in U.S. District Court here Jan. 29, 2002, alleging Sports Shinko Hawaii sold Kiahuna to KG Holdings despite an agreement with him to buy the property for $10 million.
But while Resnick's case is settled, a broader dispute remains between KG Holdings and a trustee in Japan investigating whether Sports Shinko Hawaii's sale of three golf courses and two hotels to KG Holdings shortchanged creditors of the Osaka-based parent company of Sports Shinko Hawaii.
According to a person familiar with the investigation, Sports Shinko, which owed its parent company money, had separate offers for the five properties that collectively came to about $15 million more than the $21.2 million paid by KG Holdings.
The four properties besides Kiahuna are the Queen Kapi'olani Hotel, Ocean Resort Hotel Waikiki, Mililani Golf Club and Pukalani Country Club. Sports Shinko paid roughly $164 million for the properties plus one other small hotel during the late 1980s.
Deputy trustee Keijiro Kimura could not be reached in Japan yesterday. But Kimura is said to be pursuing offers to buy the two hotels and golf courses in hopes of obtaining some of the proceeds for distribution to creditors of Sports Shinko Hawaii's parent company.
KG Holdings spokeswoman Ruth Ann Becker said the trustee had not approached KG Holdings about selling its other properties acquired from Sports Shinko. "KG Holdings does not have any intention of selling any of the other assets," she said.
The $10 million in proceeds from Kiahuna paid down a roughly $11 million mortgage held by Bank of Hawaii. The mortgage was secured by former Sports Shinko Hawaii properties. KG Holdings assumed the mortgage as part of its purchase of Sports Shinko Hawaii assets.
Japan-based Sports Shinko Co. Ltd. had roughly $2 billion in estimated debts when it was forced into the equivalent of Chapter 11 bankruptcy by government-operated debt-disposal agency Resolution and Collection Corp.
Sports Shinko Hawaii and its subsidiaries were not placed under court protection, but Kimura was appointed president of the companies in his asset recovery effort.
In November, Kimura petitioned the Hawai'i District of U.S. Bankruptcy Court to use U.S. bankruptcy laws to pursue suspected fraudulent Sports Shinko Hawaii transfers, and was allowed to proceed in February.
Kimura said in one filing that a Sports Shinko employee in Japan provided documents "that appear to indicate the former management concealed, siphoned off, and/or fraudulently transferred company assets."
Since then, Kimura, through local counsel Alston Hunt Floyd & Ing, has subpoenaed property sale information and other documents from another Honolulu law firm, McCorriston Miller Mukai MacKinnon LLP, which has done work for Sports Shinko subsidiaries in Hawai'i.
In a March 14 filing to compel production of Sports Shinko documents, Alston Hunt attorney Glenn Melchinger declared that Kimura believes Sports Shinko subsidiaries may have claims related to the Kobayashi transactions.
Along with Hawai'i, Sports Shinko Co. had subsidiaries in California and Florida that owed the parent company more than $50 million.
Mainland subsidiaries of the company owned the Grenelefe Golf & Tennis Resort in Florida, which was sold at a bankruptcy auction for a court-set minimum bid of $12.75 million last June, and the La Costa Resort & Spa in California, which was sold for $120 million in November 2001.
One other Sports Shinko hotel in Hawai'i, the Diamond Head Beach Hotel, was sold in March 2001 for $4.5 million to local developer Peter Savio, who said he paid market value for the property and is not a focus of Kimura's investigation.
