Bankrupt Malama
Spa shuts doors

The company switches
to Chapter 7 bankruptcy
from a Chapter 11 filing

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By Erika Engle
eengle@starbulletin.com

The upscale Malama Salon & Spa Ltd., with once-grand rapid expansion plans, has closed its doors in Manoa and at Ala Moana Center, following a vote of its new board of directors Wednesday.

"We found that out (yesterday)," said Dwight Yoshimura, general manager of General Growth Properties in Hawaii, which owns Ala Moana. "Apparently their board of directors voted ... to close the store indefinitely. I think at this point the attorneys are working it out."

The nearly 100 employees were informed at closing time Wednesday that the doors would not reopen yesterday morning.

Yoshimura has asked lawyers for Ala Moana to gather information as to who Malama customers should contact.

Malama's attorney, Jim Wagner, was not available.

The Sept. 4 Chapter 11 bankruptcy filing will be amended to Chapter 7 liquidation, according to a spokeswoman for the spas' founders.

The board voted 3 to 1 with one abstention in favor of closing the doors to make way for the Chapter 7 filing, said Mona Wood, former public relations director for Malama's previous management.

Original co-owner Max Suiter, a member of the board, voted in favor of keeping the two locations open, she said, but the change in the bankruptcy filing will allow bidders to come forward to take over the business.

Through Wood, Suiter said his "biggest regret, more than losing Malama, at this point, is that all of these employees he has come to cherish are losing their jobs, especially at this time."

Calls to the single number for both operations went unanswered. A recording advises customers to watch for Malama's opening in Kailua in the winter, but that lease, along with Malama's lease at the Halekulani, was rejected by the bankruptcy trustee, according to Molly Mosher-Cates, vice president at Kaneohe Ranch Co. Ltd.

"When we signed the lease, there was only the Manoa store," she said. "It would have been a perfect addition to Kailua. Unfortunately, with Ala Moana and Halekulani it was just too big too quick."

The more than 11,000 square feet at 602 Kailua Road had undergone significant renovations before Malama hit financial difficulties.

"We have been talking to a prospective user that could take advantage of the improvements that have been done there," Mosher-Cates said, though she would not identify the other party. "Otherwise we will have to find alternatives that would remove a whole lot of plumbing and perhaps cut the space up."

Halekulani will set up and operate its spa facility internally, said Gerald Glennon, executive assistant manager of the hotel.

In its initial filing, Malama listed debts of more than $5 million owed to more than 240 creditors and assets estimated at $2.5 million.