Several heated debates led to delayed action on two motions yesterday in continued Chapter 11 reorganization hearings for Hawaiian Telcom Communications Inc.

Judge Lloyd King delayed until Thursday a decision on whether the company can add noteholders Pacific Investment Management Co. and Capital Research & Management Co. to the official committee of unsecured creditors.

The motion, filed Dec. 23, requested that they be added either to the five current members or as a replacement for two existing members. Their claims represent more than 56 percent of the $350 million in Hawaiian Telcom's outstanding senior unsecured notes and an additional 13.5 percent of the $150 million in subordinated notes.

“;We believe that this motion is a distraction”; to the reorganization efforts, said Curtis Ching of the Office of the U.S. Trustee. “;We believe that the committee does have diverse interests. The committee is functioning effectively.”;

King also delayed a decision on whether Hawaiian Telcom can employ financial advisory firm Lazard Freres & Co., given a potential conflict with Lehman Commercial Paper Inc. raised by the U.S. Trustee.

“;This is the type of thing where the application should be outlining possible disclosure conflict issues,”; Ching said. “;And in this case, they have not.”;

Hawaiian Telcom attorney Paul Basta argued that Lazard has been key in helping the company move quickly through its restructuring process after filing for bankruptcy in early December.

“;Lazard has been leading a sale effort,”; Basta said during the hearing. “;That effort is being continued in earnest.”;

King said that under the circumstances of the case, “;the employment of Lazard should be approved.”;

There also was disagreement on whether a credit bid would qualify as a sale of the company, which would impact a possible fee owed to Lazard.

Earlier in the two-and-a-half-hour hearing, King granted a motion to seal some court documents for competitive reasons, with access granted to about a half-dozen parties such as the U.S. Department of Justice and the creditors' committee. He also approved an uncontested insurance premium agreement.