Amfac Hawaii workers
owed $1 million

The state retirement system
says the company is trying to shift
liability for the severance pay

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By Tim Ruel
truel@starbulletin.com

At least 50 former Amfac Hawaii workers on Maui are awaiting $1 million total in severance pay after Circuit Court placed the firm's two Kaanapali golf courses into receivership four months ago, records show.

The International Longshore and Warehouse Union, which represents the employees, is discussing the issue with Amfac, said Rebecca Covert, an ILWU attorney. "That is a topic," she said.

An ILWU official on Maui could not be reached for comment. An Amfac attorney declined comment.

The state Employees' Retirement System is foreclosing on a $66 million loan it made to Amfac in 1991 and has accused Amfac of trying to shift the liability for the severance pay to the property's receiver, Honolulu accountant Joseph Toy.

Amfac's loan was secured by a mortgage on the golf courses. The court appointed Toy in March to manage the two courses during the foreclosure proceedings.

On April 5, Amfac subsidiary Amfac Property Investment Corp. filed a memorandum with the court saying that Amfac and the ERS were trampling on Amfac's collective bargaining agreement with its employees, 51 of whom were unionized.

In a response filed in court, the ERS pointed out that Toy had merely declined a deal that involved paying Amfac a monthly thousand-dollar fee to continue employing its workers. Instead, Toy set up a new company that rehired the employees, in keeping with a court order. The move enabled Toy to avoid picking up Amfac's liabilities, such as the severance, the ERS said.

In an interview, Toy said he is negotiating with the employees' union for new terms of employment with his company.

Toy said he is merely following the court's guidelines to take care of the properties, which does not include taking on Amfac's obligations or employees.

Amfac has told Toy that the employees are owed about $1 million in severance, as well as about $225,000 in accrued vacation benefits, from before the courses went into receivership, the ERS said in its court filing. Amfac is simply trying to make Toy liable for the severance, and if the responsibility switches to Toy, the ERS would recover less on the defaulted loan, the ERS said.

"In reality, [Amfac] is attempting to shift over $1.2 million of its corporate liabilities to the state's pension fund," ERS attorney Don Gelber wrote in reply to Amfac's memo.

Parent company Amfac Hawaii filed Chapter 11 bankruptcy in Chicago in February, though its Amfac Property Investment subsidiary was not part of the filing.

Chicago-based JMB Realty Corp. bought Amfac in 1988 for nearly $1 billion, and has spent much of the past decade shedding the firm's assets.