Hawaiian Air creditors seek bankruptcy trustee
By Dan Nakaso
Advertiser Staff Writer
A committee of creditors yesterday blasted the chairman of Hawaiian Airlines for "an apparent pattern of self-dealing" as it supported a motion to appoint a trustee to oversee Hawaiian through reorganization.
The committee's filing with the federal bankruptcy court called the appointment of a trustee a drastic step in a bankruptcy case, but necessary if Hawaiian is to successfully reorganize.
ADAMS
The filing supports a motion made last month by Boeing Capital Corp., Hawaiian's major aircraft lessor, asking the court to appoint a trustee replacing the airline's management in overseeing the carrier's Chapter 11 reorganization.
The committee filing backed criticisms that have been directed at Hawaiian's board of directors and John Adams, Hawaiian's chairman and CEO, since the airline filed for bankruptcy protection in March.
Allegations cited in the creditors' filing repeat charges made by Boeing that a Hawaiian stock buyback announced last year came at the expense of creditors and the company.
The tender offer resulted in the payment of approximately $17 million to "insiders," according to the creditors.
Soon after the payment, Hawaiian asked its aircraft lessors and employees for concessions.
The creditors also cited a $2 million, one-time payment and monthly $75,000 payments to Smith Management, LLC, the investment management company of Adams and his colleague, Randy Smith.
"It has been established that millions of dollars were paid to insiders of (Hawaiian) in the year prior to the bankruptcy," the creditors said. "These payments resulted in a substantial and significant depletion of the estate's assets that could otherwise have been available for the payment of the debtor's obligations."
The creditors committee also cited "substantial acrimony" between Adams and Boeing, which it said could cause significant operational problems for Hawaiian as the company tries to restructure its aircraft leases.
"The appointment of a trustee will allow the debtor to work with its creditors in order to move forward with a reorganization, free of the taint of insider transactions," the committee said.
In a statement in response, Hawaiian Airlines said it is "disappointed that the creditors' committee has reached this conclusion, but anticipate engaging in further discussions with the committee during the coming week."
The airline said it will address the creditors' concerns and resolve them in the best interest of the company and "all of its constituents."
"We continue to believe that management's strategic plan is sound," the airline said. Appointment of a trustee "would only serve to disrupt this process, to the detriment of all parties" in the dispute.
Reach Dan Nakaso at 525-8085 or dnakaso@honoluluadvertiser.com.
