Marn fight leads
into bankruptcy

A court-appointed trustee disputes
the right of the owners of McCully
Shopping Center to make such a filing

A seething court dispute among members of the Marn family, owners of McCully Shopping Center and several other Oahu commercial properties, has moved into bankruptcy court.

McCully Associates LP, a partnership headed by Alexander Y. Marn, has filed for protection under Chapter 11 of the bankruptcy code, a law that lets debtors remain in charge of a business while it reorganizes.

Attorney Jerrold K. Guben, representing McCully Associates, said the petition was filed because of mounting legal fees and payments to professionals that have reached levels the partnership thinks are outrageous. The 20 largest creditors are owed $435,421, according to the bankruptcy filing. Guben said that is all for accountants, lawyers and court-appointed trustee Thomas E. Hayes. In all, there have been more than $1 million in such fees.

That is about the level of fees asked for in Hawaiian Airlines' first bankruptcy, he said. "I'm not running Hawaiian Airlines. I'm running a small shopping center," Guben said. He also said the partnership objects to long-term leases Hayes allegedly has made, with terms that run beyond the period in which Hayes should still be trustee.

Hayes, however, who says he is the only one legally running the financial affairs, said the filing is not really about fees. "Basically, it's a desperate attempt by Alex Marn to get control of the company," said Hayes, who was appointed in October to take control of the money away from the Marns.

Hayes filed a motion in bankruptcy court Friday saying that he alone, as trustee, was allowed to file for bankruptcy and he saw no need to do so. The partnership has $500,000 in the bank, has been paying its bills and is not insolvent, the Hayes' filing said.

Hayes said today that a Chapter 11 bankruptcy would put Alexander Marn and his partners back in charge of operations, after he had used his court-granted powers to remove them. "I have a great admiration for Jerry Guben, but he wasn't around through all this," Hayes said. "The 'outrageous' fees were caused by Alex Marn and Eric Marn litigating and relitigating," he said. The fees would not have reached the level they have "had it not been for their litigiousness," he said.

He said he will seek to have the bankruptcy case dismissed.

The bankruptcy sparring is only the latest round in a fight that began in 1998, when James Y. Marn Jr. sued Alexander Marn and the three other Marn brothers over alleged misappropriation of money and property.

He alleged that country club memberships and other personal perks should not have come out of partnership funds.

So many suits and countersuits have piled up since in Circuit Court that the court had to bundle them all together. Instead of a case number, the matter has a title: Marn Family Litigation. Earlier this year, 11 boxes of the court files, by no means all of them, were hauled over to the Intermediate Court of Appeals for judicial review of one part of the dispute.

According to the bankruptcy filing, trustee Hayes has submitted bills for more than $19,000 for professional fees.

The biggest debt listed is $115,200 claimed by real estate consultant Steve Sofos of Sofos Realty Corp. for property management fees. A close second are legal-services bills for $112,254 from the law firm Brooks Tom Porter & Quitiquit. Certified Public Accountant Taryn R. Schuman says she is owed $66,790.

Except for one status-unknown amount of $15,500 for accountant Catha L. Combs, all the unsecured creditors' claims are disputed by the McCully partnership.


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