Campbell Estate heir files for bankruptcy
By Jim Dooley
Advertiser Staff Writer
Campbell Estate heir and prominent Honolulu businessman Fred Trotter and his wife filed for bankruptcy yesterday, postponing a $28 million lawsuit scheduled to go to trial today over the Trotters' failed efforts to pump water from Punalu'u Valley.
Advertiser library photo • Oct. 29, 2001
The former Campbell Estate trustee, his wife, Valerie Mendes Trotter, and two of her companies filed for federal bankruptcy court protection on the eve of the trial of the suit filed against the Trotters by the Finance Factors companies.
The decision to file for bankruptcy protection "was very difficult for me and my wife," Fred Trotter said.
Trotter said in his written statement that he and his wife spent "most of our life savings" on the water venture.
Fred Trotter is a descendant of James Campbell, the Scottish carpenter who came to Hawai'i, built a business empire and died in 1900, leaving behind an estate now worth $2.3 billion. The estate, Hawai'i's second wealthiest landholding trust, terminates in 2007 and its assets will be distributed among 31 direct heirs.
The decision to file for bankruptcy protection "was very difficult for me and my wife," Trotter said yesterday. "Many people know that James Campbell was my great-grandfather and therefore assume that I am a wealthy man. That is not the case."
Trotter does not receive annual compensation from the estate. Among the debts he listed yesterday is a $1 million personal loan from his mother, Muriel Sutherland, one of the direct heirs of James Campbell.
Creditors say the Trotters' debts come to $30 million to $40 million, but Fred Trotter estimated the debts at closer to $10 million.
The lawsuit stems from loans to Ko'olau Agricultural Co., run by Valerie Trotter, to develop water resources in Punalu'u Valley on the Windward side of O'ahu.
Ko'olau Agricultural, Valerie Trotter and another Trotter-operated company, Pacific Asian Inc., all filed separate bankruptcy papers yesterday.
"We have taken this step with sadness and great reluctance because it marks the end of more than 15 years of hard work on the part of ourselves and many dedicated employees to develop the water resources of Punalu'u Valley," Fred Trotter said in a written statement.
According to Circuit Court records, Ko'olau Agricultural drilled three wells on Punalu'u property leased from Kamehameha Schools/Bishop Estate. The plan was to pump more than a million gallons of fresh water a day from the three new wells into the Board of Water Supply system to accommodate new real-estate development in the Makakilo area by Finance Realty Inc., a division of the Finance Factors company.
But financing for the venture dried up three years ago. The Trotters said at the time they needed another $5 million and three or four more years to complete the project.
Although the Punalu'u wells have yet to begin producing water, the Board of Water Supply gave advance allocations of water to Finance Realty, allowing construction of the Kapolei Knolls residential development. The board agreed to the advance allocation on the understanding that the Punalu'u wells would eventually begin pumping into the system.
Three years ago, the Board of Water Supply billed Finance Realty $913,000 for the Kapolei Knolls water, but the company argued in court papers that Ko'olau Agricultural should pay the bill. That bill, now up to $1.7 million, is listed by Ko'olau Agricultural in bankruptcy papers filed yesterday as a "disputed claim" against the company.
Attorney Jerrold Guben, representing the Trotters and their companies in the bankruptcy cases, said the filings yesterday "automatically halt" the Circuit Court trial.
The business dispute with the Finance Factors companies, and a related foreclosure action against the Trotters filed by Kamehameha Schools/Bishop Estate concerning the Punalu'u Valley land, were "an ongoing and major drain on Fred and Val's finances," Guben said yesterday.
Fred Trotter was required by the lenders to personally guarantee a portion of the loans.
"He got stuck with those personal guarantees," Guben said.
Kamehameha Schools won the foreclosure case at the Circuit Court level, but that decision has been appealed to the Hawai'i Supreme Court.
