HVCB hits Summit
with claim for $260,000
The bureau cites overbillings
and unused call center credits
The Hawaii Visitors & Convention Bureau is out nearly $260,000 because of overbilling and underuse of call center services provided by the now-defunct telecommunications company Summit Communications Inc., and the bureau is seeking to get the money back.
The HVCB filed a claim for $259,131 this month in U.S. Bankruptcy Court, where Summit is to be liquidated, though the bureau isn't likely to see any of the money soon. Summit's bankruptcy trustee has sued the company's former management over unrelated allegations of financial wrongdoing, and that legal battle may decide how much money will be available for Summit's creditors.
Summit fielded telephone inquiries and e-mail for the bureau, a nonprofit tourism marketing agency funded by the state, beginning in 2000. Financial problems led Summit to file bankruptcy in February 2002, and the bureau's claims against Summit come from events that occurred after Summit filed, which will give the bureau high priority for repayment before other creditors.
Most of Summit's telecommunications assets have been sold to Hawaii Direct Telephone Co., a Texas-based telecommunications company, which resulted in a $125,000 payment to Summit's bankruptcy estate and the assumption of equipment leases.
The payment from the asset sale will not cover much of the administrative costs of the bankruptcy, including the bureau's claim, as well as Summit's $525,822 federal tax debt. Meanwhile, Summit's former management denies the allegations in the trustee's lawsuit, and is seeking a jury trial.
Summit's contract with the visitors bureau was once worth between $32,500 and $50,000 per month. The bureau and its island chapters have been overbilled $89,154 by Summit, the bureau said in the Bankruptcy Court filing.
In addition, the bureau has calculated it is owed $187,707 for call center service that it paid for, but did not receive. Under an old contract between the bureau and Summit, the bureau accumulated credits for unused, prepaid call center time.
The HVCB was never able to use the minute credits, even after it began a new contract with Summit this year that cut the bureau's payments and eliminated a monthly minimum payment.
Summit lost other business and faced a serious cash-flow crunch earlier this year that led its trustee to sell the company.
"It was going to be difficult for Summit to give them the minute credits without getting paid for it," said Wayne Mau, an attorney representing the bureau. The bureau wasn't using the call center services enough to start using up the credits, per its agreement with Summit.
The bureau stopped racking up credits in January, when Derek Sakaguchi was appointed Summit's trustee, replacing the former management. The overbilling stopped in June.
Summit did give the bureau some bill reductions, totaling $13,000, and undercharged the Kauai Visitors Bureau for $4,731 in call center services. That reduced the bureau's overall claim to $259,131.
The bureau is now getting call center services from Direct Telephone, whose monthly bill ranges $12,000 to $25,000, said Nik Thomas, the company's president. The bureau's contract with Direct Telephone will end after this year.
Direct Telephone's main focus is to provide telephone services to businesses and buildings, though Thomas said he hopes to keep the bureau as a call center customer. He added that Direct Telephone has better equipment than its predecessor and a stronger commitment to service.
The bureau, meanwhile, faces losing a state contract to market Hawaii to international tourists starting next year, potentially reducing its annual budget by millions of dollars. The bureau's new contract is being firmed up by the state Hawaii Tourism Authority, which is under pressure to improve accountability for state money.