Former Crazy Shirts
owner’s creditors
take plan to court

Unsecured creditors will likely
get less than 17 percent
of what they're owed

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By Tim Ruel
truel@starbulletin.com

General unsecured creditors of the bankrupt former owner of retailer Crazy Shirts Inc. would receive approximately 14 percent to 17 percent of their claims under a liquidation plan that heads for a court confirmation hearing this month.

The plan was submitted jointly last month by attorneys who represent an official committee of unsecured creditors and the debtor, The Final Straw Inc.

Final Straw sold Crazy Shirts out of bankruptcy last year to locally based Waikiki Trader Corp., in order to pay an estimated $23 million in total claims.

Bank of Hawaii, a creditor, has been paid $1.4 million for a secured claim. The bank is also owed a general unsecured claim of $12.9 million, but it will have to wait until other general unsecured creditors receive at least $1.47 million. Under Final Straw's analysis of the liquidation, those creditors are likely to receive a maximum total of $709,000, meaning there may not be money left.

One secured creditor, Congress Financial Corp., has already been paid most of the $4.9 million it was owed. Final Straw employees who worked for Crazy Shirts will be paid the $150,000 owed for wages and benefits.

Further distribution to creditors largely depends upon sales of Crazy Shirts under its new owner, Waikiki Trader. As part of its purchase agreement, Waikiki Trader paid $8.25 million up front, and agreed to pay a percentage of sales if Crazy Shirts stores generate more than $20 million in sales this year and next year.

Based on a review of financial statements, Chuck Choi, attorney for the committee of creditors, said "it's highly unlikely" that the stores will sell more than $20 million.

In its best year, 1996, more than 70 Crazy Shirts stores grossed in excess of $90 million. Shortly before filing bankruptcy, the company had $47.7 million in sales at more than 40 stores. Today, the firm has 37 stores. A Crazy Shirts spokesman declined to comment on current sales.

Votes on the plan are due Sept. 19, and a hearing is scheduled for Sept. 26.