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Superferry ships awarded to construction lender


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POSTED: Thursday, July 02, 2009

Hawaii Superferry Inc. can abandon its ships to lenders owed $158.8 million for their construction, a federal judge ruled.

Bankruptcy Judge Peter Walsh's decision yesterday means the vessels, relocated from Hawaii to a shipyard in Mobile, Ala., may be taken over by the federal agency that helped fund the ships' construction.

“;We're not going to be returning back to the state of Hawaii now that the estate has abandoned the ships,”; Leon Barson, a Hawaii Superferry attorney, told Walsh during a hearing in Wilmington, Del., where the Hawaii Superferry filed for bankruptcy on May 30.

Hawaii Superferry and its parent, HSF Holdings Inc., have only about $1.2 million in cash and a single ferry engine to use to pay creditors, company officials said in court. That means creditors may be forced to file lawsuits against the private-equity firm that controlled Hawaii Superferry to recover anything, creditor attorney Craig Wolfe told Walsh.

Hawaii Superferry is controlled by J.F. Lehman & Co., which was founded by former Secretary of the Navy John F. Lehman, said Alex Harman, a partner at the firm.

J.F. Lehman specializes in military and maritime markets, Harman said in court. The private-equity firm lost its entire $85 million investment in Hawaii Superferry, Harman said.

Walsh also ruled that the main part of the bankruptcy case will stay in Delaware. Only claims filed by the state of Hawaii related to its contract with the ferry company will be transferred to U.S. Bankruptcy Court in Honolulu, Walsh said.

The U.S. Department of Transportation's Maritime Administration was owed more than $135.7 million by Hawaii Superferry because of loan guarantees it made to help build the ships. Agency officials said yesterday in court they may foreclose on the vessels.

The ships' builder, Austal USA LLC, is owed $23 million. The vessels can each carry 866 passengers and 282 cars, according to court records.

Harman said that the company tried unsuccessfully to lease the ships to ferry operators in the Caribbean and Europe. The ships, which require about $20,000 a day to operate not including crew costs, may wind up being used by the U.S. military, Harman said.

The company has no plans to try to regain control of the ships, Harman told Walsh.

Hawaii Superferry was formed in 2002 to provide high-speed ferry service among Oahu, Maui, Hawaii and Kauai.

A law passed by the Hawaii Legislature on Oct. 31, 2007, was designed to allow the company to operate after a series of successful state court legal challenges, Hawaii Superferry said in a court filing.

Eventually that law was struck down by the Hawaii Supreme Court, which ruled that the law was intended specifically to benefit a particular company, in violation of the state constitution.

The company spent as much as $20 million fighting in court to keep the operation open, including the costs of keeping the ships ready and crews on the payroll while it waited for the state Supreme Court to rule, Harman said.