Mahalo finds buyer for certificate

The bankrupt interisland airline wins a one-week reprieve from liquidation so it can get money for creditors

By Russ Lynch
Star-Bulletin

Mahalo Air has been given another week to try to avoid going into liquidation and having its remaining assets sold off, after the company told a bankruptcy judge that it has a potential buyer for its operating certificate.

An air cargo operator based in Britain, called English Worldwide Aviation Corp., has said it wants to make an offer for Mahalo's operating certificate, which is good for anywhere in the United States, said Jerrold Guben, Mahalo's attorney.

Interisland passenger operations would not resume, but Honolulu would be an Asia-Pacific cargo hub for the airline.

Bankruptcy Judge Lloyd King yesterday agreed to Guben's request to hold off putting Mahalo into a Chapter 7 liquidation until the end of the business day Monday.

Guben said the British operator has expressed interest and its involvement could bring in some cash for Mahalo's creditors, who are owed nearly $5 million. Mahalo has said its assets are worth about $1 million.

English Worldwide is offering $150,000 for the certificate, Guben said. The company was registered to do business in Hawaii earlier this month, with a Waipahu address and listing its officers as Michael W. English, president; Kay M. English, vice president; and Ginger A. English, secretary.

Guben said there are still some legal requirements to be met and English Worldwide will have to come up with cash. "As I told all the prospects, when I see the color of their money" the may have a deal, he said.

Judge King earlier appointed a trustee, Paul Sakuda, and ordered Mahalo into a liquidation.

At a Nov. 10 hearing, however, the judge agreed to hold off implementation of that order for two weeks while Mahalo explored some late inquiries about possibly buying its license.

That extension would have run out yesterday but the one-week delay means Mahalo is still in a debtor-in-possession Chapter 11 status, which holds off creditors while it attempts to reorganize.

"As far as I'm concerned, let somebody come" and kick in some money, said Robert Iwamoto, head of Roberts Hawaii Tours & Transportation, who invested more than $5 million in Mahalo and is its biggest investor and creditor.

Iwamoto, who says he is still a believer in the viability of a third interisland airline to compete with Hawaiian and Aloha airlines, said he would welcome any opportunity to get something back for creditors.

A separate potential investor surfaced late last week. Charles Johnson, of San Diego, said he has several business interests in California and a connection with a Maui helicopter business.

Johnson said in a telephone interview late Friday that he would like time to explore the possibilities.

"I'm interested in trying to save Mahalo," he said, but he said he would first need 30-60 days for a close look. "I have been looking for an opportunity to do an airline in Hawaii for some time," he said. He said he is primarily interested in freight runs from Asia to the U.S. mainland but would consider passenger service.

Johnson's approach, however, was not relayed to the court yesterday.

Mahalo began flying in Oct. 1993 at fares lower than the bigger competitors, Hawaiian and Aloha airlines, but filed for bankruptcy reorganization this summer and stopped flying Sept. 2.