A small, for-profit company owned by the Hawaii State Teachers Association has filed for bankruptcy and plans to shut down.

But the bankruptcy liquidation of HSTA Member Benefits Corp., which is legally separate from the teachers union, will have no impact on benefits paid to the HSTA's 13,000-plus members.

"MBC has now been closed, all employees have been laid off, and a trustee will be appointed by the (bankruptcy) court to determine how the remaining assets will be allocated to MBC's creditors," the HSTA said.

"Because MBC is a separate entity from the HSTA, the bankruptcy is limited to MBC."

Founded in 1993, MBC serves as an intermediary or broker for health, home, auto and life insurance plans sold to HSTA members at a discount,

The HSTA said a company known as Associated Third Party Administrators, or ATPA, has been hired to replace MBC.

The HSTA said it had been in the process of winding down MBC when it discovered that the company significantly underreported the taxes it owed.

The tax liabilities, including penalties and interest, exceeded the company's overall assets, resulting in the bankruptcy filing, the HSTA said.

In addition to staffers, the company's president and chief executive officer, Ray Sodetani, was terminated.