Jimmy’s Travel clients
in for long wait

By Russ Lynch
Star-Bulletin

Bankrupt Jimmy's Travel Inc. has assets of only $225,000 while claims by the agency's customers equal more than three times that, according to the company's bankruptcy filing.

That means a long wait for the up to 2,500 would-be travelers to get back little, if any, of their cash.

The filing in bankruptcy court shows claims of $743,000 by 2,100-2,500 creditors, mostly people who paid in advance for Las Vegas junkets and were unable to take them after the Honolulu travel agency abruptly closed its doors June 19.

The customer claims make up the biggest part of a total of $1.3 million in liabilities, according to papers filed yesterday by attorney Harrison P. Chung.

Chung had said earlier that he was representing only James K.S. Lee, owner of Jimmy's Travel, but instead filed for the company itself. Such a filing normally ties up all of a company's assets until a bankruptcy judge appoints a trustee to evaluate them, try to turn them into cash, and then dole it out among the creditors.

Cynthia Nakamura, supervising attorney for the state Regulated Industries Complaints Office, said today that the corporate filing will make things more complicated.

For example, the major asset that remains apparently is $200,000 held by the company under federal rules, which require money to be set aside to repay customers who didn't get advance-paid trips. That is an asset of Jimmy's Travel, not James Lee personally, Nakamura said.

If Lee alone had filed, it might have been easier for creditors to get at that asset, she said. Now it is tied up in the corporate bankruptcy process. "Now that it has been pulled into bankruptcy it is going to be tricky trying to keep them separate," she said.

Nakamura said Jimmy's Travel obtained a $200,000 letter of credit from Hawaii National Bank, apparently secured by cash in a savings account. The letter of credit was filed at the U.S. Department of Transportation.

Getting at the money will now be a matter for what's likely to be a complex bankruptcy, Nakamura and others in the case said.

Gayle Lau, a federal bankruptcy court trustee, said a trustee will be appointed to try to gather what assets are available and decide how to parcel them out to creditors. That can be a long process and costs and fees can eat into whatever assets there are, he said.

In a case where assets were similarly slight, the Mahalo Air bankruptcy, first filed as a reorganization attempt a year ago and later converted into a liquidation, holders of thousands of prepaid tickets have yet to see any money and all the assets have been sold.

Jimmy's Travel may be less complicated because it is starting out as a liquidation with no costly attempt to get the company restarted.

Clouding the money picture is a lawsuit filed in late June by Melvyn Iwaki, who says he lent Lee $100,000 in January, about the time Lee started the business, and is still owed the entire amount plus interest.

Meanwhile, the state Regulated Industries Complaints Office last week said it suspended Jimmy's Travel's travel agency license in order to prevent further fraud. Lee has been unavailable for comment since shutting the business.