Liberty House
ex-CEO Monahan
on trustee list5 are leading candidates to
oversee Hawaiian Airlines'
bankruptcy
Former Liberty House Chief Executive Officer John Monahan, who led the Hawaii department store chain through the costliest bankruptcy in state history, is one of the five top candidates to become trustee of Hawaiian Airlines, sources close to the situation said.
Monahan, whose name was on both three-man lists submitted by Boeing Capital Corp. and the unsecured creditors committee, has no airline experience but was instrumental in leading the state's largest retailer through a contentious three-year Chapter 11 reorganization. That bankruptcy culminated in mid-2001 with the $200 million sale of Liberty House to Federated Department Stores Inc., resulting in the local stores becoming Macy's outlets.
The U.S. Trustee's Office has been searching for a trustee since Bankruptcy Judge Robert Faris' May 16 order requiring that one be appointed. Faris made the unusual move a week after a two-day hearing in which Hawaiian Chairman and CEO John Adams was found to have consistently put his own interests and that of other shareholders ahead of the creditors' interests. Hawaiian filed for Chapter 11 on March 21.
Adams said yesterday the Hawaiian Airlines' board decided not to appeal Faris' ruling even though it disagrees with the decision.
"We have decided that it is in the best interests of everyone that Hawaiian Airlines move forward with its restructuring in the most expedient manner possible and without distraction from further court actions," he said.
Monahan, who became Liberty House CEO in 1997 after seven years with the company, was in charge throughout its entire bankruptcy.
In the process, however, he worked himself and other local management out of a job. Monahan, though, considered the reorganization a great success because it kept alive the stores and saved most employees' jobs.
By the time it was over, Liberty House's bankruptcy had run up legal fees and other expenses of at least $16 million. Ironically, the previous record holder was Hawaiian, which spent $5.4 million before emerging from Chapter 11 in 1994.
A 1974 Brigham Young University graduate, Monahan started his own consulting company last year, JMN Associates, which specializes in restructuring, retail and real estate.
Monahan could not be reached for comment yesterday.
Curtis Ching, a trial attorney with the Trustee's Office who is coordinating the search, said the working list of five finalists still could change prior to San Diego-based U.S. Trustee Steven Katzman making the final decision.
"We're definitely making progress to who the trustee will be," Ching said. "We're much closer than a week ago. We're still on our timetable and hope to appoint one by the end of this week."
Star-Bulletin reporter Russ Lynch contributed to this report.