Creditors' rights cited in ruling
By Debbie Sokei
Advertiser Staff Writer
The federal bankruptcy court yesterday refused a request from an investment group to speed up the bidding process for Hawaiian Airlines.
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Corporate Recovery Group LLC, a Wyoming-based turnaround company, which announced a plan to take over Hawaiian on Wednesday, had asked the court to decide on its bid by May 3 and had asked for a Feb. 27 hearing to approve that schedule. CRG also asked the court to approve a "topping fee," or reimbursement for their expenses of $5.4 million if their bid fails.
CRG's takeover plan includes investing $30 million in Hawaiian Airlines in exchange for 90 percent ownership.
"A prompt conclusion of this case is a laudable goal, but it must be weighed against the right of the creditors and other parties ... to have an adequate opportunity to analyze and respond," said U.S. bankruptcy Judge Robert Faris, in a two-page ruling. He said the decisions, including approval of the topping fee, have "far-reaching implications."
On Wednesday, CRG proposed to invest $30 million in Hawaiian Airlines in exchange for 90 percent ownership. The company said it had the backing of Boeing Capital Corp., Hawaiian Airline's largest creditor, and Bruce Nobles, a former Hawaiian CEO.
CRG said its plan would give creditors 50 percent or more of what they are owed, but would leave shareholders with nothing.
Shares of Hawaiian Holdings Inc., the parent company of Hawaiian Airlines, fell 87 cents yesterday to $2.98 with 1.6 million shares traded, more than 10 times the average volume over the past 200 days. The shares reached a 52-week high of $5.10 on Monday.
Jerry Schwartz, a financial adviser with Arista Investment Advisors Ltd. in Honolulu, said none of his clients own shares in Hawaiian Airlines, but if they did he would have advised them a long time ago to get rid of the stock.
To anyone holding the shares, he suggested, "They can sell now and attempt to salvage whatever small amount they can, or they should be prepared to lose all their money."
Also yesterday, Hawaiian Holdings said it will file a reorganization plan for the airline that will compete with the CRG plan and provide some relief for shareholders.
Hawaiian Holdings is controlled by former Hawaiian Airlines CEO John Adams and has 28 million shares outstanding. At least two other groups have also expressed an interest in bidding for Hawaiian.
The court and creditors will decide which of the competing reorganization proposals to accept.
Reach Debbie Sokei at 525-8064 or dsokei@honoluluadvertiser.com.
