Fee sought in bid for airline blasted
By Debbie Sokei
Advertiser Staff Writer
The $5.4 million "topping fee" Corporate Recovery Group LLC, the company bidding to take Hawaiian Airlines out of bankruptcy, has asked the court to approve would be paid by the winning bidder if CRG's reorganization plan fails.
The money would be used to reimburse CRG for time and expenses incurred while putting together its $30 million investment plan to restructure Hawaiian. The plan is backed by Boeing Capital Corp. and Bruce Nobles, former CEO of Hawaiian. CRG, a Wyoming-based turnaround company, filed its plan for Hawaiian Airlines last Wednesday.
The fee raises the bar for other parties interested in filing a reorganization plan, said Jerrold Guben, an attorney with Reinwald, O'Connor & Playdon who specializes in bankruptcy court cases.
"It's a chilling effect," Guben said. "Somebody who is going to prepare a competing plan not only has to pay $30 million but build in the extra topping fee just to be equal to the bid."
The court and creditors will decided which of the reorganization plans to select. Guben said he doesn't think the judge will approve the fee because CRG's plan could eventually be rejected by the court.
"That is the risk that you take," Guben said.
On Friday, U.S. Bankruptcy Judge Robert Faris denied CRG's motion for a Feb. 27 hearing to speed up the bidding process for Hawaiian Airlines and approve the fee. Faris denied the request saying creditors and other parties, interested in filing a reorganization plan, need more time to analyze and respond to the motion. Another hearing on the motion is set for April 1.
Hawaiian Airlines filed for bankruptcy protection in March after John Adams, former CEO of Hawaiian Airlines, could not reach aircraft lease agreements with Boeing Capital Corp. Boeing asked the bankruptcy court to remove Adams as head of Hawaiian and appoint a trustee to bring the airlines out of bankruptcy, which the court did.
Trustee Josh Gotbaum, Hawaiian Holdings, Inc., the parent company of Hawaiian Airlines, and Vx Capital Partners, a San Francisco-based airline investment company, are expected to file reorganization plans in competition with CRG.
Thomas Fritsch, in-house counsel and spokesman for Hawaiian Holdings, sharply criticized CRG's topping fee request. He said the company is overreaching and doesn't deserve a fee, "unless they think that being the first party to file a plan entitles them to it."
Gotbaum filed an objection to CRG's request.
In his filing, Gotbaum said CRG is seeking "extraordinary relief" and the $5.4 million fee is 18 percent of CRG's investment.
"Given the amount of the topping fee requested by the plan proponents, the relative size of that payment to the investment proposed and the fact that a party other than the trustee is seeking the relief, the trustee believes that this is an extremely important issue deserving wide notice," said Gotbaum.
Reach Debbie Sokei at 525-8064 or dsokei@honoluluadvertiser.com.
