Home builder
still in limbo

Another potential buyer
has withdrawn its offer for
bankrupt Hawaiian Palisade's
factory-built operations

By Russ Lynch

A New York company that had proposed buying the remaining assets of bankrupt Hawaiian Palisade Homes Inc. has withdrawn its offer.

Publicly held Housing Solutions Hawaii Inc., which trades on the Pink Sheets under the symbol HSHI, announced in December that it would like to buy what is left of the factory-built housing company for $1.1 million.

The deal would have included nine uncompleted homes and the company's Kapolei factory.

Housing Solutions announced yesterday that it no longer intends to pursue the deal.

There are other potential buyers, however, said Mary Lou Woo, the court-appointed trustee in Hawaiian Palisade's bankruptcy liquidation. "We do have two other offers," Woo said, but the Housing Solutions one had advanced further than the others.

She said she had not seen the announcement that the deal would not proceed.

One home sold

Meanwhile, the bankruptcy court in Honolulu approved the sale of one of the unfinished homes to Maui resident Leslie Lai. "She has a piece of property (on Maui) and she is going to complete the structure on her property," said Lai's attorney, Elizabeth Kane.

She said the court has not yet filed a written order approving the sale. When it does, the sale can be formalized and then Lai has to work out how to get the structure to Maui, Kane said.

Court records show Lai had paid $72,000 toward the purchase of the house, which is at the Kapolei factory.

She agreed to pay an additional $25,000, for a total price of $97,000, and is to take possession of the house "as is, where is," according to the court approval on Jan. 24. The $25,000 has been deposited with the trustee, Kane said. Originally, Lai was to have paid $120,000 for a completed home.

Trustee Woo said today that she thought the original announcement in mid-December by Housing Solutions Hawaii (a name change from JSDC Inc.) was premature.

Since it announced its intent to buy, the company has been negotiating mostly with City Bank, the largest creditor in the Hawaiian Palisade bankruptcy, Woo said. City Bank, holder on the mortgage for the Kapolei factory, is owed $1.5 million. Central Pacific Bank is also a creditor.

Previous sale fell through

An earlier effort to sell the company to California-based Westlink Group for $1.5 million fell through and Judge Robert Faris ruled in October that reorganization was not getting anywhere and the business should be liquidated.

Hawaiian Palisade battled with unions and the U.S. Housing and Urban Development department for two years before getting its factory and its homes approved.

In July 2002, the state Office of Consumer Affairs sued the company, charging that it misled consumers and government agencies. At that time, the department said, the company had contracts to sell 170 houses but had built only 13.

With debts of more than $4 million, Hawaiian Palisade filed for bankruptcy court protection in June so it could stay in business while it attempted to reorganize.

Several creditors forced the company into an involuntary Chapter 7 liquidation proceeding in August. Hawaiian Palisades, founded by Arthur Smith and Stuart Furman, registered its trade name in December 1999 and was incorporated in April 2002, according to state records.

Housing Solutions Hawaii, which says it has 60 million shares outstanding, said that it will pursue other acquisition opportunities now that it has withdrawn from the Hawaiian Palisade deal.

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