Adams could have
decision in Hawaiian’s
stock tradeThe airline is not paying
bills for its parent, which
halts trading in the stock
Hawaiian Airlines' former top executive, whose financial dealings are blamed for sending the carrier into Chapter 11 reorganization bankruptcy, could play a role in whether the parent company's stock remains trading on the American Stock Exchange.
John Adams, who remains the chairman, chief executive officer and majority shareholder of parent company Hawaiian Holdings Inc., has been thrust back into the spotlight along with his fellow board members because airline trustee Joshua Gotbaum has decided not to pay its parent's administrative obligations, according to a source familiar with the situation.
The nonpayment to Mellon Investor Services LLC, the holding company's transfer agent, resulted in the American Stock Exchange and the Pacific Exchange halting trading late in Monday's session.
The stock hasn't traded since and there has been no indication if it will be delisted and moved to the over-the-counter bulletin board. It last traded at 80 cents.
Hawaiian Holdings, whose only subsidiary is the airline, said in a Securities and Exchange Commission filing Tuesday that the stock would not be able to trade until a new transfer agent was appointed or Mellon was reinstated.
Adams did not return a phone message yesterday and Judith Thoyer, a lawyer for the holding company, said she couldn't comment about when the situation would be rectified.
Mellon Financial Corp. spokesman Ron Sommer said yesterday "there has been no material changes in the circumstances that surrounded our (Monday) resignation."
Without a transfer agent, there is no one to record transactions of the stock.
The airline, meanwhile, is solely concentrating on its reorganization efforts, the source said.
"The trustee only has the power, authority and responsibility for the property, business and affairs of Hawaiian Airlines, and he's supposed to use the property of Hawaiian Airlines to further its business interests, economic interests and its constituencies," the source said. "He's not authorized to use the property of the airline to pay anyone else's bill, including in this instance, a bill of (Hawaiian) Holdings."
Furthermore, the source said, Gotbaum couldn't pay even if he wanted to without a court order.
"To get a court order, if he intended to seek one, he'd have to demonstrate it was in the economic best interests of the airline," the source said. "I'd suspect the judge would be skeptical of that."
Sommer declined to reveal the amount of the bill and Thoyer, who works for the New York law firm Paul, Weiss, Rifkind, Wharton & Garrison, only would say that it wasn't a big amount.
In May, the airline listed in its U.S. Bankruptcy Court statement of financial affairs that it owed Mellon just under $13,000 at the time of its March 21 filing.
San Diego-based U.S. Trustee Steven Katzman, who selected Gotbaum on July 3 to be the airline's trustee, stressed that the airline and holding company are separate entities.
"I don't foresee people taking actions that would not be in the best interests of (the airline)," Katzman said from Washington, D.C. "If it's in the best economic interest of the parties in interest to deal with the issues pertaining to the holding company, I imagine that's what the parties of interest would do. But he has to make that call. He's the trustee."
American Stock Exchange spokesman Lynn Teresky said yesterday the situation was being reviewed and evaluated but wouldn't say whether the stock would be delisted.
New York-based attorney Lisa Beckerman, whose firm represented the airline after it filed for bankruptcy on March 21, suggested delisting is a possibility.
"Obviously, the holding company doesn't have a lot of money," said Beckerman, a partner with Akin Gump Strauss Hauer & Feld LLP. "I think there's maybe no cash and no one willing to write a check," added Beckerman, whose only connection with the airline now is as its leasing counsel.