Friday, September 19, 2003

Trustee seeks to block
records access to Holdings

Attorneys for Hawaiian Airlines trustee Joshua Gotbaum, the unsecured creditors' committee and aircraft lessor Boeing Capital Corp. filed motions in U.S. Bankruptcy Court yesterday opposing a request by parent company Hawaiian Holdings Inc. to obtain sealed aircraft lease information.

Hawaiian Air Gotbaum's motion said he is concerned about unnecessary dissemination of confidential information in the sealed documents beyond the creditors' committee, which is assisting him in maximizing the value of the airline. He said the release of such confidential and sensitive information could harm Hawaiian in its negotiations with aircraft lessors and also could benefit Hawaiian's competitors in their leasing agreements.

Hawaiian Holdings filed a motion last week claiming that the sealing of certain documents has unfairly hurt its ability to develop a Chapter 11 reorganization plan. Holdings attorney Richard Havel said the parent company needed access to those documents "to level the playing field."

The trustee's motion said that neither Hawaiian Holdings nor AIP LLC, whose controlling member is ousted airline Chairman and Chief Executive John Adams, have "made any showing that there is equity value in (Hawaiian Airlines) to protect."

AIP is the majority shareholder of the airline with just more than half the outstanding shares.

The trustee's motion pointed out that aircraft lessor Ansett Worldwide already has filed a claim for $110 million and that "the trustee anticipates that any claim by Boeing will be much larger."

International Lease Finance Corp. also has not yet filed a claim.

In addition, the motion said, the airline is faced with $67 million in pension underfunding liability, which it partially blames on Adams' decision to make a $25 million tender offer and divert those funds from the company.

Finally, the motion said that Hawaiian Holdings and its related parties already have violated a confidentiality agreement that it previously entered into with the airline involving the ILFC restructured lease agreement.

Boeing Capital and ILFC also opposing granting Hawaiian Holdings' motion to allow access to the sealed information.

A court hearing has been set for 9:30 a.m. Wednesday.

Boeing Capital said in its motion it is concerned that Hawaiian Holdings, AIP and other related parties are seeking to formulate a reorganization plan to regain control of the airline. Boeing Capital also said that Hawaiian Holdings and its related parties have "artificially inflated" their status and are merely equity shareholders and at the bottom of the payout priority scale. Boeing Capital also said it would be ironic if Holdings were granted access to the information since the creditors holding the largest claims in the case -- the aircraft lessors -- would not have access to the same information.

The creditors' committee said Hawaiian Holdings "forfeited their rights to be at the negotiating table" when a trustee was appointed following U.S. Bankruptcy Court Judge Robert Faris' ruling that Adams had placed the interest of the investors ahead of those of the creditors. The committee also said that if Holdings and its affiliated parties were given access to the records for the purpose of formulating a reorganization plan, then any party professing such an interest also could gain similar access.


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