Hawaiian Palisade Homes Inc. yesterday was ordered into a Chapter 7 bankruptcy, which normally means a liquidation and a sell-off of assets piece by piece. Hawaiian Palisade
ordered into Ch. 7By Russ Lynch
rlynch@starbulletin.comHowever, the unsuccessful producer of factory-built homes still hopes a business might be found to buy its Kapolei factory so it can be restarted, its attorney said today.
Hawaiian Palisade voluntary filed in June for bankruptcy court protection, under Chapter 11, which would have allowed the business to continue to exist while it reorganized.
The reorganization could have meant refinancing or finding new investors or a buyer so the creditors, who are owed a total of more than $4 million, could get back at least some of their money.
Hawaiian Palisade and a mainland lender, Westlink Inc., both unsecured creditors, asked Judge Robert Faris in the U.S. Bankruptcy Court in Honolulu to keep the Chapter 11 reorganization effort alive.
Faris declined to do that, however, since there is no buyer on the horizon.
His decision supported City Bank, the biggest secured creditor, which holds the mortgage on the factory and is owed $1.5 million.
The change still leaves a small chance for some payment to unsecured creditors, their attorney said.
"Even though it is in Chapter 7, the judge is leaving open the opportunity for the trustee to locate a buyer for the whole business," Cuyler Shaw, attorney for the unsecured creditors.
Hawaiian Palisade attorney Chuck Choi said there is a possibility a buyer could surface.
"The debtor would like to see the trustee sell the factory so it can be used for building HUD-certified homes," Choi said. Hawaiian Palisade's factory had been certified by federal Housing and Urban Development department as a qualified home builder.
"Conversion doesn't necessarily mean a piecemeal liquidation of assets," Shaw said.
Unsecured creditors filed claims for a total of $1.7 million and that number could rise, Shaw said.
The office of the U.S. bankruptcy trustee in Honolulu was ordered to appoint a trustee to oversee the Chapter 7 process.