Aloha Tower owner
facing bankruptcy

By Rick Daysog
Star-Bulletin

Creditors of the financially troubled Aloha Tower Marketplace have filed bankruptcy proceedings against the owner of the waterfront retail and restaurant complex.

Mitsui Trust & Banking Co., DLR Construction Corp., the City and County of Honolulu, tour operator E Noa Corp. and contractor Rode Brothers yesterday afternoon filed an involuntary Chapter 7 liquidation petition against Aloha Tower Associates Piers 7, 8 and 9.

The filing comes four days after Mitsui agreed to sell its loan on the Honolulu Harbor project to Chicago-based Trinity Investment Trust L.L.C. for an undisclosed, discounted price.

The petition is expected to make the sale of the mortgage easier and isn't likely to affect the daily operations of the marketplace.

Rick James, attorney for Aloha Tower Associates, declined comment yesterday.

Andy Beaman, attorney for Aloha Tower Development Corp., the state agency that oversees the project, said he hopes the bankruptcy will allow Mitsui to sell the mortgage and refinance the marketplace.

As part of the bankruptcy petition, Mitsui asked the bankruptcy court to keep real estate developer Sanford Murata as receiver of the property. In August, a Circuit Court judge appointed Murata as receiver after Mitsui sued to foreclose on the project last year.

Mitsui said it and the other companies filed the bankruptcy petition to help resolve claims against the developers. Aloha Tower Associates has been unable to pay all its debts and its overall liabilities exceed its assets.

The petition did not list Aloha Tower Associates' debts and assets. But the five creditors said they were owed a total of $69.9 million.

Mitsui said it was owed the largest chunk of the debt. Those debts amounted to $68.99 million plus interest for a loan Mitsui issued to Aloha Tower Associates in 1993.

The City and County of Honolulu was the next largest creditor at about $500,000 for property taxes.

DLR Construction said it was owed $159,001 while E Noa said that the developers owed them $183,000. Rode Brothers listed a claim of $48,879.

The bankruptcy petition is the latest legal action facing the project. In its foreclosure suit, Mitsui alleged Aloha Tower Associates didn't make payments on a $60 million loan issued in 1993. Before that, Aloha Tower Associates sued Mitsui, saying the bank reneged on more than $600 million in financing.

The Aloha Tower Marketplace covers 165,859 square feet of commercial space on land leased from the state. The developers pay the state an annual lease of $1 million a year.