Updated at 4:14 p.m., Friday, May 16, 2003
Court orders trustee for Hawaiian Airlines
Advertiser StaffIn a decision that its creditors sought and Hawaiian Airlines fought, a federal bankruptcy judge today decided a trustee should manage the embattled airlines.
Judge Robert Faris said in his ruling that the benefits of a trustee outweigh any potential detriment.
The appointment of a trustee is not as a prelude to liquidation, but rather is a means of improving Hawaiians prospects for a speedy and successful reorganization, Faris said.
According to the judge, the airline's management did not act prudently in carrying out a $25 million stock buyback last year to benefit shareholders and that Hawaiian received no benefits from a $500,000 transfer to its parent company shortly before it filed for Chapter 11 bankruptcy protection March 21.
Boeing Capital Corp., which filed the motion for a trustee, had called both of those transactions fraudulent transfers.
A trustee could be named by the U.S. Office of the Trustee as early as next week.
Boeing and the creditors committee have said they want a trustee with experience in airline management.
Boeing had planned to recommend Paul Casey, who served as Hawaiians chief executive until he resigned last June after an attempted merger with Aloha Airlines failed, and Michael McQuay, a former Hawaiian executive vice president of operations and chief operating officer until October 1997, when he was named managing director and chief executive of Air Pacific, Fijis international airline.