Quality Homes files for Chapter 7 bankruptcy

By Andrew Gomes
Advertiser Staff Writer

Quality Homes of the Pacific, which lost its lease with the state two months ago, has filed for Chapter 7 bankruptcy to liquidate assets and partially repay creditors.

The company, started nearly two years ago to produce low-cost homes for Hawaiians, was able to deliver its factory-built homes to all customers who ordered them, according Steven Guttman, a bankruptcy attorney representing the company.

More than $100,000 should be available to Quality Homes creditors owed a little less than $1 million, Guttman said.

Among the roughly 35 creditors are investors such as the Office of Hawaiian Affairs and the Laborers' International Union Local 368, suppliers and company founders including Kali Watson.

Watson, a former Department of Hawaiian Home Lands chairman, established Quality Homes in an aviation hangar at Kalaeloa with expectations of building and selling 100 steel-framed houses by this past June, but was able to deliver only about two dozen.

Company setbacks included a 45-home contract with Hawaiian Homelands in Kapolei that fell through, and lenders largely unwilling to issue consumer mortgages for the houses with unproven resale value in Hawai'i.

In October, Quality Homes got word that its landlord, the state Transportation Department, wouldn't renew its lease because the hangar was in demand by aviation maintenance companies given priority to lease space at the former Barbers Point Naval Air Station.

Guttman said the expense of moving and restarting Quality Homes operations would have required a new capital infusion that investors were unwilling to make.

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