Aloha lawsuit for sale
, which has been on a fast track to liquidate its assets since filing for bankruptcy in mid-March, said in federal District Court yesterday that it plans to sell the legal claim in its 2006 lawsuit against go! parent Mesa Air Group Inc.
to the highest bidder.
"A lawsuit is no different than a propeller," said James Wagner, an attorney for Aloha Chapter 7 trustee Dane Field. "It's an asset and we're going to sell it."
He said a motion would be filed Monday or Tuesday and an auction likely would be held the following week.
Wagner said the likeliest bidder would be Yucaipa Cos. LLC, which is Aloha's majority shareholder and second secured creditor behind Aloha's primary lender, GMAC Commercial Finance LLC. Wagner said Mesa also could be a possible bidder.
"As you can imagine, there's probably very few bidders for this asset," Wagner said.
A winning bid by Yucaipa, which is owed $106.7 million, would allow it to control the lawsuit, while a bid by Mesa would be, in essence, an out-of-court settlement. Aloha is suing Mesa for alleged predatory pricing that helped force Aloha out of business, as well as for allegedly misusing confidential information obtained during Aloha's first bankruptcy.
Last month, Mesa settled a suit with Hawaiian for $52.5 million over the misuse of confidential information.
However, Mesa General Counsel Brian Gillman said yesterday that "we haven't even considered bidding" on the Aloha lawsuit.
"We believe the case is without merit and we intend to vigorously defend the case in any proceeding," he said.
Wagner said that unless Mesa decides to settle, Wagner said Yucaipa likely would be the winning bidder. In that case, Aloha creditors would have to wait until the end of the lawsuit to share in any possible recovery.
GMAC, which initially was owed about $49 million, still is due about $34 million following the sales of Aloha's aviation contract services and cargo divisions. If there is additional money left after GMAC is made whole, then Yucaipa would be next in line for up to the $106.7 million it is owed.
Both GMAC and Yucaipa have said they would give 5 percent of any recovery to Aloha.
Federal Judge David Ezra chastised both parties' attorneys yesterday for letting the case sit for two years with very little action. He said he wouldn't allow the case to sit around as "a bargaining chip."
"We're going to be on the fast track in this case and it's not going to be decided two years from today," Ezra said. "This is a case of some importance to the community, and it's also important to the Mesa shareholders."
The trial is scheduled for Oct. 28.