Motions delayed in HawTel hearing


POSTED: Tuesday, January 27, 2009

Several heated debates led to delayed action on two motions yesterday in continued Chapter 11 reorganization hearings for Hawaiian Telcom Communications Inc.

Judge Lloyd King delayed until Thursday a decision on whether the company can add noteholders Pacific Investment Management Co. and Capital Research & Management Co. to the official committee of unsecured creditors.

The motion, filed Dec. 23, requested that they be added either to the five current members or as a replacement for two existing members. Their claims represent more than 56 percent of the $350 million in Hawaiian Telcom's outstanding senior unsecured notes and an additional 13.5 percent of the $150 million in subordinated notes.

“;We believe that this motion is a distraction”; to the reorganization efforts, said Curtis Ching of the Office of the U.S. Trustee. “;We believe that the committee does have diverse interests. The committee is functioning effectively.”;

King also delayed a decision on whether Hawaiian Telcom can employ financial advisory firm Lazard Freres & Co., given a potential conflict with Lehman Commercial Paper Inc. raised by the U.S. Trustee.

“;This is the type of thing where the application should be outlining possible disclosure conflict issues,”; Ching said. “;And in this case, they have not.”;

Hawaiian Telcom attorney Paul Basta argued that Lazard has been key in helping the company move quickly through its restructuring process after filing for bankruptcy in early December.

“;Lazard has been leading a sale effort,”; Basta said during the hearing. “;That effort is being continued in earnest.”;

King said that under the circumstances of the case, “;the employment of Lazard should be approved.”;

There also was disagreement on whether a credit bid would qualify as a sale of the company, which would impact a possible fee owed to Lazard.

Earlier in the two-and-a-half-hour hearing, King granted a motion to seal some court documents for competitive reasons, with access granted to about a half-dozen parties such as the U.S. Department of Justice and the creditors' committee. He also approved an uncontested insurance premium agreement.