Both Central Pacific Bank and a U.S. Bankruptcy trustee objected this week to a proposal by bankrupt prefabricated home builder Hawaiian Palisade Homes Inc. to sell its assets to a California firm.
Trustee, bank oppose
plan to sell bankrupt builder
A California firm said it would
acquire Hawaiian Palisade
By Lyn Danninger
In the proposal filed with the court, Hawaiian Palisade attorney Steven Geshell said Chula Vista, Calif.-based Westlink Group was prepared to pay up to $1.5 million for the company with plans to resume operations as soon as possible. The deal would be subject to negotiating a binding purchase agreement and financing.
In a filing with U.S. Bankruptcy Court on Tuesday, Bankruptcy Trustee Curtis Ching said the proposal was premature and not adequately documented.
"Given the serious allegations pending against the debtor and its principals, the court should not allow the debtor to force through a quick sale," Ching said in the filing.
Ching has several questions about the proposal, he said yesterday.
"It's premature because we haven't had a meeting of creditors. The other main objection is that the agreement is not a really binding agreement on the purchaser," Ching said.
It's not clear whether the deal would be a sale of assets or stock and whether the current principles of Hawaiian Palisade would stay involved with running the company after the sale, he said.
Another court hearing in the matter is scheduled for Monday to discuss other matters in the case, including payment to Hawaiian Palisade's attorney and whether Westlink intends to lend Hawaiian Palisade money to pay workers who are owed back wages, Ching said.
In its objection to the proposal, one of Hawaiian Palisade's creditors, Central Pacific Bank, also had several questions related to how wage claims would be paid by the new company.
"It (the proposal) does not demonstrate what wage periods are covered by the proposed loan and whether the proposed loan will be sufficient to cover all taxes, benefits and other portions of the labor burden that are incident to the payment of wages," CPB's court filing said.
Hawaiian Palisade's 20 largest creditors are owed about $2 million.
According to the proposal, Westlink would initially repay about $100,000 a month in debt for the first year, plus about $4.4 million after three years. Losses are projected at $4 million over the first seven months of operations. The company then projects about $11 million in net profit in the following five months.
In June, creditors of Hawaiian Palisade filed a petition to force the company into involuntary Chapter 7 liquidation bankruptcy. The state Office of Consumer Protection filed a lawsuit last month in state Circuit Court alleging the publicly traded Kapolei company, its chief executive, Art Smith, and Stuart Furman, the chief financial officer, misled consumers and some government agencies. The case is still pending.
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