Aloha name auction voided


POSTED: Wednesday, March 04, 2009

A federal Bankruptcy Court judge has invalidated a December auction that would have paved the way for Mesa Air Group's go! to take over the Aloha Airlines name and logo.

Judge Lloyd King, emphasizing that the auction to buy Aloha's intellectual property should have been a public process, blasted yesterday the attorneys conducting the auction for refusing to allow in Honolulu Advertiser reporter Rick Daysog, who had written a letter to the court voicing his complaint.

“;The (Bankruptcy) Code clearly provides for a public setting and the exclusion of a reporter is an outrage,”; King said while banging his fist on the desk.

Jim Wagner, an attorney for Aloha trustee Dane Field, said the media was kept out of the auction because of the belief that its presence might “;dampen the process”; but that in retrospect he made a mistake.

King, who said the auction must be reheld, earlier in the hearing appeared to be entertaining the idea of invalidating the winning bid of Yucaipa Cos. and allowing backup bidder Hawaiian Airlines to take over the Aloha name.

Yucaipa attorney Robert Klyman argued, however, that Yucaipa committed no wrongdoing and should not be penalized by having its bid disqualified.

King also ruled that the Aloha trustee must return Hawaiian's $50,000 deposit after Hawaiian said it wanted its money back and no longer wanted to be the backup bidder.

Yucaipa, the former majority shareholder of Aloha, had submitted a winning credit bid of $750,000 for Aloha's intellectual property in which Yucaipa would reduce the amount of money that it was owed by Aloha. Under the auction rules, the Aloha trustee's administration fund would receive 5 percent of the bid, or in this case $37,500.

However, at a Dec. 3 confirmation hearing, King postponed approving the auction after Yucaipa, which had bought an Aloha lawsuit against Mesa, reached an out-of-court settlement that included allowing Mesa to rebrand its go! planes as Aloha. Even though the Aloha estate would have received a minimum of $6 million, or at least $600,000 a year, under the 10-year licensing agreement, former Aloha employees were outraged that Yucaipa would consider licensing the name to go!, which many of the former Aloha employees blamed for Aloha's demise on March 31 of last year.

Jonathan Ornstein, chairman and chief executive of Mesa, said yesterday that making the Aloha brand available worldwide again “;is in the best interest of the people of Hawaii.”;