A U.S. Bankruptcy Court judge has granted Boeing Capital Corp.'s request for a status conference hearing after it accused Hawaiian Airlines of stonewalling on the aircraft lessor's request for specified records. Boeing says Hawaiian
withholding recordsBy Dave Segal
dsegal@starbulletin.comJudge Robert J. Faris scheduled a hearing for 9:30 a.m. Tuesday to expedite discovery. Boeing Capital, which has asked that a trustee be appointed to replace management during the airline's Chapter 11 bankruptcy process, said in its motion for a status conference that Hawaiian has failed to supply records Boeing Capital needs to prepare for a May 6 hearing on the trustee issue.
Hawaiian spokesman Keoni Wagner declined to comment about the stonewalling accusation.
In another development, the remaining union holding out on the airline's request for employee concessions was hoping to hammer out a tentative agreement last night. Hawaiian's dispatchers, who belong to Transport Workers Union Local 540, have been asked to agree to $186,000 in labor cost reductions. They are expected to vote this weekend if an agreement is reached. The dispatchers, who are responsible for making the flight plan and securing the fueling, previously rejected two tentative agreements. The four other Hawaiian unions already have agreed to more than $15 million in concessions.
Boeing Capital, meanwhile, argued in its status conference motion that Hawaiian may lose its ability to reorganize without the expedited discovery and the subsequent appointment of a trustee. Boeing Capital repeatedly has expressed concerns about Hawaiian's management.
In addition, Boeing Capital pointed out in its motion that aircraft lessors under Section 1110 of the Bankruptcy Code are permitted to repossess their aircraft 60 days after the date of the bankruptcy filing. The 60-day window from Hawaiian's filing, which occurred March 21, expires May 20.
Boeing Capital said it will be owed nearly $18.4 million by Hawaiian on May 21. Boeing Capital, the financing arm of Boeing Co., also owns all 13 of the 717s in Hawaiian's interisland fleet and three of the 14 767s that Hawaiian uses for its mainland flights. If Boeing Capital repossessed all its aircraft, that would encompass more than half of Hawaiian's fleet.
Among the records that Boeing Capital is seeking immediately are related party agreements, board level information and documents, tender offer information and documents, time-specific working capital and loan information, time-specific concession requests, and high-level or time-specific financial documents.
Boeing Capital said it believes the working capital and loan information will establish that Hawaiian and its lenders were aware that Hawaiian had insufficient liquidity and that its $25 million tender offer would merely serve to jeopardize its "already precarious financial position."
In the filing, Boeing Capital said it met with Hawaiian's attorneys on April 4 via telephone conference call -- four days after the motion was filed asking for a trustee -- and that Hawaiian responded that Boeing Capital's requests were "burdensome" in view of the timing of the hearing and Hawaiian's other priorities.
Boeing Capital said it narrowed down its immediate requests and faxed a letter to Hawaiian's attorneys that same day and asked for a response by April 7. Hawaiian returned a call on April 8, according to the motion, and at that time Hawaiian's attorneys informed Boeing Capital that the aircraft lessor was not entitled to discovery until after Hawaiian issued its April 18 response to Boeing Capital's request for a trustee.
Boeing Capital also said Hawaiian previously had requested a status conference to discuss the trustee motion but subsequently reversed that position. Boeing Capital said, however, that both the Office of the U.S. Trustee and the unsecured creditors committee have advised Boeing Capital that a near-term status conference is desirable.
"Hawaiian's position on discovery is indicative of why a trustee must be appointed," the motion said. "In light of the forthcoming Section 1110 deadline, it is clearly in the best interest of creditors and the estate for the debtor to cooperate with discovery and to attempt to resolve the motion expeditiously.
"While it is to be expected that the parties may disagree with the scope of discovery, it is not to be expected that the debtor would simply stonewall, refusing to even consider providing a minimal level of discovery ... . In its misguided effort to retain control of the debtor, Hawaiian's management has lost sight of the distinction between what is in its own interest and what is in the best interest of the creditors and the estate."