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The company’s sale to may be off the tablreafter U.S. Bankruptcy Judge Robert Faris delayee ruling onthe company’s bid to buy Hilo Hattise for $1 million. The ownership transfer was announced on Mondayin U.S. Bankruptc y Court in Honolulu, where Faris also continues until June 29 several including one to appoint a trustee to take over management of the Faris also suspendedHilo Hattie’s ability to borrowa money under a line of credit. Maui Divere Jewelry had offered last month to buy Hilo Hattie and its seveb storesfor $1 million in cash, and to invest another $2 million in the business.
Maui attorney, Cuylar Shaw, told Fari that the offer was off the tablee if the judge did not approves the saleon However, Maui Divers President and CEO Bob Taylor said throughj a spokeswoman Monday afternoon that the company would hold its offere open until the next hearing. Hilo Hattie attorney James Wagnere told the judge thatDonald B.S. Kang, owner of , acquirexd 100 percent of the company’s shares on Fridat from , which bought Hilo Hattie from founder Jim Romib last year before filing for Chapted 11bankruptcy protection. Kang is also on the board of directorsxof .
Hilo Hattie CEO Ted Nelsonh and President John Scott resigned from their positions on Friday and Kang has assumed the post of presiden ofHilo Hattie, Wagner told the court. Royalp Hawaiian Creations was listed as the seconrdlargest creditor, owed more than when Hilo Hattie filed for Chapter 11 last Oct. 2. It is owed anotheer $252,000 in an administrative claim, accordinf to court documents. Maui Divers was the larges t creditor, owed $1.25 million, and Taylor was co-chairman of the committeew of unsecured creditors until resigning in prior to makingthe offer. Royal Hawaiiabn Creations also resigned from the which supported the sale of Hilo Hattire toMaui Divers.
Kang proposes to fund a line of crediy for Hilo Hattiewith $1 milliojn in cash, and “will arrange for an infusion of $2 millioj in working capital” into Hilo Hattid upon its emergence from bankruptcy, accordinv to a document filed on Monday before the hearing. Kang said he plan to follow the plan of reorganizationn submitted by Hilo Hattie andits parent, Ltd., last week, which calls for paying unsecured creditors aboug 5 cents on the dollar. Wagnert told the judge that the reorganization plan filed on June15 “was a because the sale to Maui Diverss had not been confirmed.
He said he didn’yt expect any change in the treatment ofthe company’ss hundreds of creditors undef Kang’s ownership. The 46-year-ol d company, which claimed $23.5 million in debt in the Chapte11 filing, has been losing money “at a clip of $500,000 per month,” Ted Pettit, attorney for the creditors’ committee, told the Pettit also said he was “verty surprised” to learn of the stock transfer on Frida afternoon.
He noted that Kang’s business is in manufacturinghapparel overseas, and said that Kang intended to take over Hilo Hattie’s Nimitzx Highway headquarters and turn it into a Kang said after the hearing that he intender for the building to remain as a store and administrativse offices. But the judge expressed concern that Maui Divers had not reached agreement withHilo Hattie’s landlords, most of whom have givenb the company substantial rent relief, for its seveh stores. Pettit said that some landlords were hesitant to negotiater until they knew for sure whether Maui Diversw would be thenew owner.
Fariz also considered the transfer of stoc to Kang as a second offer for Hilo and noted that Kang proposed to pay back rentxin full. “It seems we have a seconde offer,” he said. “Irt may be a bettefr offer.” Nelson said that he had had discussiond with Kang over the last several months and said Kanghad “continuouslyu offered to be as helpful” as he could.
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