Hawaiian Telcom Communications Inc. was given approval yesterday to continue operations as it moves forward with Chapter 11 reorganization in U.S. Bankruptcy Court in Wilmington, Del.

Bankruptcy Judge Approves Hawaiian Telcom Chapter 11

 

A judge in Delware approved the companys motions to keep paying its employees and its vendors while its in Chapter 11 bankruptcy re-organization.

 

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In Hawaiian Telcom's first day in court, Judge Peter Walsh also delayed deciding on a request by the company to use $75 million in cash to fund overall operations for the near future.

Walsh asked the company and lawyers for Pacific Management Investment Co., the world's biggest bond-fund manager, to try to work out their differences over the proposal.

PIMCO and Capital Research and Management Co. objected to the use of the cash, claiming that Hawaiian Telcom wrongly offered lenders the right to claim some company property as collateral to win the lenders support.

Eric Yeaman, president and chief executive officer, said in an interview he expects the request to be approved today.

“;It dictates how the cash will be controlled and what kind of reporting requirements come along with that,”; Yeaman said. “;Absent some fine details getting worked out, we are going to be able to support what we need to support in terms of our ongoing business.”;

The company filed for bankruptcy Monday, listing $1.35 billion in assets and $1.27 billion in liabilities. Hawaiian Telcom is incorporated in Delaware.

Yeaman said the restructuring process will help the company operate with less debt. He expects the company to roll out three business products in the next year, as well as move forward with new facets of wireless and next-generation video services.

Also yesterday, company lawyer Paul Basta said in court that Carlyle Group, a Washington, D.C.-based private-equity firm that acquired Hawaiian Telcom in a leveraged buyout in 2005, offered to increase its investment in the company before it filed for bankruptcy,

The proposal is still out there, Basta said in an interview after the court hearing. Steven Golden, vice president of external affairs for Hawaiian Telcom, said lenders are evaluating the offer, which was listed in the company's initial bankruptcy filings.

Walsh also questioned why the company filed its case in Delaware when it is regulated in Hawaii and is important to customers here.

Basta said the company filed in Delaware because it was closer than Hawaii to many of its biggest investors, bondholders and financial advisers. He said the company may consider moving the case if the local interest has a strong preference for Hawaii.