Aloha Tower filesThe owners of the often-troubled Aloha Tower Marketplace yesterday filed for Chapter 11 bankruptcy reorganization in federal court.
The company lists debts up to
$100 million and says it owes
between 50 and 99 creditors
By Lyn Danninger
Aloha Tower LP lists assets of between $10 million and $50 million and debts ranging from $50 million to $100 million.
The company said it owes between 50 and 99 creditors.
Creditors include the landlord, state agency Aloha Tower Development Corp., which is owed about $199,000, and Enoa Corp., owed $145,000. Security firm Akal Security Inc. is owed about $136,000.
The company said the bankruptcy will allow the marketplace to continue operations while it reorganizes and resolves various creditor claims, including a dispute with its lessor, Aloha Tower Development Corp.
A representative for Aloha Tower Development Corp., said he was unaware of the bank-ruptcy filing.
"It's a surprise. We don't really know anything about it," said project manager Dan Orodenker.
Last month, Aloha Tower LP filed a lawsuit against the state, claiming Aloha Tower Development Corp. had stymied its efforts to make the 162,000- square-foot property profitable by charging excessive rent and taking away needed parking stalls.
It also noted that some of its tenants have either gone out of business or filed bankruptcy since the Sept. 11 economic downturn.
The developer said it had to cut some lease rents, making the financial situation even more difficult, and has invested $1.6 million a year above revenues to keep the marketplace afloat.
"Since Sept. 11, Aloha Tower Marketplace suffered an additional and devastating economic ripple effect due to the downturn in Hawaii tourism and the state's economy," said John Miho, president of the general partner of Aloha Tower LP, Trinity Investment Trust LLC.
But some former tenants say it has been difficult to survive at the marketplace for some years, not just since Sept. 11. They believe the owners did not do enough to bring visitors to the marketplace.
"I was tired of beating my head against a wall. It just seemed like they never listened to the merchants and would not even let us organize a merchants association," said Dawn Krause, former owner of The Calico General Store, a specialty gift shop. The shop opened in 1995 and closed its doors in early 2000.
Even after she was able to re-negotiate the lease, it still wasn't enough, Krause said.
She then cut hours for her sole employee, who eventually had to look elsewhere for work.
Krause said she ended up working 12 hours a day, 7 days a week, 365 days a year -- a condition of the lease.
"It was just too much. We didn't go bankrupt, but I was just tired of fighting it," she said.
Even so, Krause said she doesn't blame Aloha Tower LLC for all the marketplace's problems.
She said Aloha Tower Development Corp. never resolved one of the most important issues, the lack of parking.
"I went to all the ATDC meetings. Every time (Aloha Tower LP) came up with a parking proposal, they got shot down," she said.
The lack of parking and the distance from Waikiki were probably the biggest reasons Aloha Tower has struggled for so long, said Andres Albano, vice president of commercial real estate firm CB Richard Ellis.
"It didn't take a rocket scientist to figure out the parking problem needed to be solved in a timely manner," Albano said. "The parking was the one thing that was controllable. The other things like 9/11 and the bankruptcy of American Hawaii Cruises were beyond their control. But something could have been done about the parking."
Aloha Tower LP acquired the lease rights to the property nearly four years ago after the developer of the project, Aloha Tower Associates, went bankrupt. The lender, Mitsui Trust & Banking Co., put the mortgage, valued at $60 million, up for sale.
Built at a cost of $100 million in 1994, the complex became the subject of complex litigation between lenders, creditors and builders.