Posted on: Friday, April 8, 2005

Conflict alleged in Aloha Air case

By Dan Nakaso
Advertiser Staff Writer

The U.S. Trustee's office yesterday challenged the selection of the Case Bigelow & Lombardi law firm to represent the creditors in Aloha Airlines' bankruptcy case, saying the Bishop Street firm has a conflict of interest because it once represented Aloha.

Case Bigelow & Lombardi and a Park Avenue-based law firm, Otterbourg, Steindler, Houston & Rosen PC, applied in February to jointly represent the official committee of unsecured Aloha creditors. But Case Bigelow failed to disclose that it had issued opinion letters on Aloha's behalf in 2000 regarding loans made by First Hawaiian Bank, according to the U.S. Trustee's motion.

The office of the U.S. Trustee represents the federal government in bankruptcy proceedings and argued in its motion yesterday that Case Bigelow's "failure to disclose its direct conflict of interest in representing the interests of its client, the (creditors) committee, disqualifies it as counsel. ... The committee should not be represented by a party with a direct financial stake favoring an outcome against the committee's interests."

Case Bigelow has filed subsequent disclosure statements about its past relationship with Aloha, according to the U.S. Trustee's motion, but "it appears that the firm still falls short of providing full and forthright information."

Case Bigelow attorney Ted Pettit, who filed the motion to employ Case Bigelow in the case, did not return telephone calls yesterday.

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