Trustee seeks investors
Hawaiian Airlines' Joshua Gotbaum
shifts his stance on attracting funds
to help the carrier reorganize
Trustee Joshua Gotbaum never set out to seek outside investors for Hawaiian Airlines because he always felt the carrier had enough cash to reorganize on its own.
But when aircraft lessor Boeing Capital Corp. and turnaround firm Corporate Recovery Group LLC teamed up with a surprise reorganization filing last month and an accelerated timeline, Gotbaum decided it was time to test the market.
So yesterday he and the airline's unsecured creditors' committee filed a joint motion with U.S. Bankruptcy Court asking for approval of a bidding process in which they be allowed to select the best reorganization offer for the airline. They would then team up with that bidder to file a collective reorganization plan to be sent to creditors for a vote.
"Since there was a CRG proposal on the table, it was important that we do the market test now," said Gotbaum, whose filing said that procedures proposed by Boeing and CRG would "likely chill participation from other potential investors."
"Very frequently in cases of bankruptcy, companies solicit investor interest relatively late in the case ... to help determine value," Gotbaum added.
"One of the issues in bankruptcy at the end of every case is a discussion what is the value of the company vs. its claims. If a company coming out of bankruptcy is worth more than its claims, than there is generally something left over for the (shareholders). If the company is worth less than its claims, then the (shareholders) receive nothing.
Gotbaum said he has no opinion now on whether the equity has any value, only referring to his past comments in which he noted that most bankruptcy cases, including Hawaiian's previous reorganization, result in the company's stock being declared worthless.
"My job is to maximize the value of the estate," he said, adding that the equity question will be answered when the value of the estate and the claims are determined.
The trustee-committee bidding process proposal, which will heard in court on April 1, calls for an April 21 deadline for potential investors to submit proposals concerning how they value the company and what investment they might make in exchange for a particular percentage of the company's stock.
Among other proposed dates, the motion offers to pick the winning proposal on May 20 with a court hearing to confirm selection of the winning bidder on May 25.
The group also suggests an Aug. 10 hearing for the reorganization plan confirmation, with a target of the "end of summer" for Hawaiian to exit Chapter 11 bankruptcy.
Gotbaum said he's received "more than a dozen" inquiries from potential investors since taking over as trustee in July, but wouldn't identify any of the parties.
Gotbaum said financial information will be made available to qualified bidders in a couple weeks after they sign confidentiality statements.
"Filing a plan a plan of reorganization is a lot of work, and the reason why I'm proposing the process is to make it possible for interested investors to come to the table without having to guess about what's going on with the company and without having to develop a largely theoretic reorganization plan," Gotbaum said.
Gotbaum noted that John Adams, chairman of parent Hawaiian Holdings Inc., said in his reorganization plan announcement this week that the proposal could be enhanced once more financial information is obtained.
"That's telling me that the best way to get value for Hawaiian is for serious investors to get the necessary information," Gotbaum said.
"Then they know when they come to the table they'll have to compete, and their proposal will be evaluated fairly."