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The Honolulu Advertiser

Posted on: Thursday, September 25, 2003

Access to Hawaiian files OK'd

By Dan Nakaso
Advertiser Staff Writer

A representative of Boeing Capital expressed concern about release of sealed data on Hawaiian aircraft leases.

Advertiser library photo • Feb. 27, 2003

Hawaiian Airlines' creditors expressed concern yesterday that the carrier's CEO, John Adams, may be trying to gain back some control just four months after a bankruptcy judge stripped him of his powers.

U.S. Bankruptcy Judge Robert Faris ruled yesterday that Hawaiian Holdings, the parent of Hawaiian Airlines, should get access to confidential information that has been sealed in the bankruptcy proceedings. Hawaiian Holdings, which is chaired by Adams, said it needed the information to understand the case and may eventually write a plan for bringing the state's largest carrier out of bankruptcy.

"They seem to be wanting to claw their way back, inch by inch," said Brett Miller, who was representing the Official Committee of Unsecured Creditors. "What's next? ... Decision-making power?"

The airline faces reorganization, Miller said, "because of their unclean hands."

Hawaiian filed for bankruptcy in March after losing $60 million in 2002. Faris removed Adams from any management role in May, saying Adams had failed to act prudently in carrying out a $25 million stock buyback last year that benefited shareholders in spite of the company's deteriorating fortunes. Adams is the airlines' majority shareholder through his company Airline Investors Partnership, it was the specter of Adams' and Hawaiian Holdings' potential role in the reorganization that attracted many of the arguments from attorneys at the hearing yesterday.

Steven Hedberg, who represents Boeing Capital Corp., one of the companies that lease airplanes to Hawaiian Airlines, said he worries "what this group will do if this information gets in their hands."

Adams, Hedberg said, may want to play the role of a "spoiler ... and scare away potential investors."

The information Hawaiian Holdings sought focuses on agreements for aircraft leases, aircraft engines and other equipment between Hawaiian Airlines and companies such as Boeing Capital Corp.

After the hearing, Hawaiian Holdings attorney Joel Samuels said the company may write its own recovery plan, but it's premature.

"We want to develop our own understanding of the economics of the case," Samuels said. Adams did not attend the hearing.

Hawaiian Holdings Inc. was incorporated in Delaware to serve as a shell company that owns 100 percent of the outstanding common stock for Hawaiian Airlines. It has no staff or operating capital, its attorneys have said in the past.

Adams was ousted after considerable efforts from creditors to have a trustee appointed. The trustee, John Monahan, then abruptly resigned after three weeks, citing personal reasons.

Josh Gotbaum was appointed trustee in July. Gotbaum is still trying to understand Hawaiian Airlines' operations, Hedberg said.

The motion by Hawaiian Holdings to get access to confidential information, Hedberg said, was the latest development in a case that resembles "bad fiction writing."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.