Shrimp farm on Kauai
gets reprieve from court

The operation's owner gets permission
to sell its assets to an Oahu firm

A financially troubled shrimp farm on Kauai was given a second chance yesterday when a federal bankruptcy judge ruled that the farm's bankrupt owner, Ceatech USA Inc., could sell its assets to an outside investor.

U.S. Bankruptcy Judge Robert Faris' ruling allows Ceatech to sell the farm to Sunrise Capital LLC of Honolulu.

Ceatech operates the farm on land leased from the state in the Kekaha Agriculture Park. Since Ceatech filed for bankruptcy protection from creditors in March, the company has limped along with a small crew doing little more than hatching shrimp.

But recently Ceatech has warned that its cash is running out, and that it risks losing its leases with the state, which are perhaps the company's most valuable assets.

Sunrise had offered to buy the farm, including the leases, for $389,000.

But Faris determined that the price did not account for lease payments that the farm owed the state and Kauai County.

After Sunrise agreed to pay an additional $37,000 to cover those costs, or $426,000 total, Faris approved the sale.

Stephen Gelber, an attorney for Sunrise, said it appears his client will continue to grow shrimp at the facility. However, Gelber declined to comment further, referring questions to Kelvin Taketa, Sunrise's director.

Taketa was not available for comment late yesterday.

Taketa, who is also chief executive of the Hawaii Community Foundation, has said that Sunrise is not related to the foundation, which manages $265 million in assets.

A Louisiana-based maker of shrimp chow, Burris Mill & Feed Inc., had objected to the sale, asserting that Sunrise's bid was too low and questioning whether Ceatech had done enough to market its assets before striking a deal with Sunrise.

But Faris brushed aside the objection, pointing to an appraisal by Ceatech, which showed the firm's liquidation value to be $389,000.

In any case, lawyers for Burris Mill did not attend yesterday's hearing.

The next step for the farm will to obtain an infusion of cash from Sunrise.

The money can be used to pay looming lease fees and employees who are hatching shrimp, said Jerrold Guben, an attorney for Ceatech.