Aloha sale of Mesa suit hits snag
An attempt by the majority investor of bankrupt Aloha Airlines to take over the defunct carrier's 2006 lawsuit against go! parent Mesa Air Group Inc.
was stalled yesterday in federal Bankruptcy Court.
Judge Lloyd King called the possible sale "totally unfair" because it has excluded other potential bidders, most notably Mesa.
"Mesa has been put a little behind the curve and it deserves an opportunity to catch up," he said. "They have to be given an opportunity to reflect and decide what they want to do."
Los Angeles-based Yucaipa Corporate Initiative Fund I, LP, was the lone bidder yesterday with a $10 million credit offer that would have reduced the $116.7 million it is owed by Aloha. It is the second secured creditor in the bankruptcy while Aloha's primary lender, GMAC Commercial Finance LLC, is the first secured creditor and is owed about $40 million following the sales of Aloha's cargo and aviation contract services units.
James Wagner, an attorney for Aloha Chapter 7 trustee Dane Field, argued that given the nature of the asset, there would be a limited number of bidders.
"I don't see other bidders," he said. "I have seen no objection by Mesa that the terms of the bidding were unfair to Mesa."
Mesa attorney Evan Jones, who participated in the hearing by phone, did not indicate whether Mesa would enter a bid, but said the bidding was "done on an extraordinarily short basis." Jonathan Ornstein, chairman and chief executive of Mesa, declined to comment via e-mail.
King also expressed concern over the 5 percent of net recovery Yucaipa and GMAC would give to Aloha, suggesting a fixed selling price be established.
"I am concerned about the nature of what the estate is going to end up with," he said. "We are selling something for possibly nothing as far as the estate is concerned."
Cuyler Shaw, an attorney representing the state of Hawaii, said he opposed the sale unless Aloha were to get 15 percent of the recovery.
"We do think that 5 percent is too little for the estate," he said.
Another hearing to approve the sale of the lawsuit, possibly including additional bidders, will be held June 26.