Honolulu Book
Shops writes
final chapter

The bankrupt company
is closing its last store

By Peter Wagner
Star-Bulletin

After more than 50 years of selling books, Honolulu Book Shops is calling it The End.

The company, which filed for Chapter 11 bankruptcy reorganization in April, is liquidating and will close its lone remaining store -- at Ala Moana Center -- at the end of this month.

"The company's cash flow is marginal at the store," said Paul Sakuda, a former Amfac executive and the court-appointed trustee in the case.

"Essentially, it's been liquidating its inventory for a couple of months now. Very little book-buying has been occurring."

Sakuda decided to speed up the process by converting the bankruptcy to a Chapter 7 liquidation to pay creditors sooner.

About 20 employees last week were told they would lose their jobs.

Waldenbooks has made an offer to take over the Ala Moana lease, Sakuda said. Waldenbooks executives today declined to comment on the offer.

Waldenbooks is owned by Borders Group Inc. and it was tough competition from that company's Books & Music stores and another big mainland book seller, Barnes & Noble Inc., that played a role in the demise of Honolulu Book Shops.

Customers at Honolulu Book's Ala Moana store yesterday were jostling for bargains as a liquidation sale, offering 40 percent discounts since Sunday, cleared shelves.

Harrison Chung, attorney for Honolulu Book Shops, said the company has been struggling with an inadequate inventory.

"In order for the store to succeed it needed to acquire close to half a million dollars in inventory," said Chung. "One of the big questions was, where would that half a million come from?"

Honolulu Books started 52 years ago with a shop in the former Gump's Store on Alakea Street.

At its height, the company operated five stores -- downtown on Bishop Street; at Pearlridge Center, Kailua Shopping Center, Hawaii Kai Shopping Center, and Ala Moana Center.

The company closed its Hawaii Kai store about six years ago. Following this year in close succession were the Pearlridge, downtown and Kailua stores.

Honolulu Book Shops has debts of more than $3 million. Major creditors include Pearlridge Center landlord Watercress Associates Joint Venture; Ala Moana Center landlord D/E Hawaii Joint Venture; Hawaii Kai Shopping Center landlord Bishop Estate; Bishop Square Associates; Ingram Publishing Co. of Tennessee; Aramark; and Booklines Hawaii.

The company's biggest creditor is its owner, the Bangkok-based Chirathivat family, claiming $2.8 million. But Sakuda considers the debt an "insider claim" and said it will be the last to be honored.

Among assets to be divided among creditors is a 7,000 square-foot property at 287 Kalihi St. that was recently sold for $725,000. The property is currently in escrow.

Besides the Waldenbooks' offer, Hallmark Marketing Corp. also has put in a bid for Honolulu Book's Ala Moana lease, Sakuda confirmed.

Chung recently filed a motion in favor of Waldenbooks, which he said made a better offer.

"Waldenbooks presented the opportunity to obtain more money to pay back creditors," he said.

One condition of the Waldenbooks offer is that Honolulu Book Shops vacate the Ala Moana store by early September, Chung said.

Honolulu Book Shops is owned by HBS Holding Co., a Hawaii company owned by Sam Andrews Ltd.

Three of the four directors of HBS are members of the prominent Chirathivat family, which operates department stores and other enterprises in Thailand. The fourth director is Colin Miyabara, Honolulu Book Shops' president.

Miyabara yesterday declined comment on the company's liquidation.