Big Island developer on rocks


POSTED: Friday, March 05, 2010

A troubled real estate developer on the Big Island may be liquidating its assets, after it was discovered that it would be unable to reorganize in its Chapter 11 bankruptcy case.

In August, Sunra Coffee LLC filed for Chapter 11 bankruptcy, seeking reorganization. However, the trustee for the case, David Farmer, found that Sunra has about $10,000 available to administer the reorganization.

“;Based on insurance obligations, quarterly fees and potential tax obligations, plus the accrual of Chapter 11 administrative expenses, the trustee concludes that the estate is hopelessly insolvent,”; according to Wednesday's U.S. Bankruptcy Court filing asking for Chapter 7 liquidation.

Sunra does business on the Big Island as Royal Hualalai Gardens, a subdivision that was under development and was offering 5-acre lots. The company also owns coffee-producing land in the Blue Mountain region of Jamaica.

Neither property is in operation, said Timothy Hogan, Farmer's attorney who filed the Chapter 7 motion. The coffee lot in Jamaica has been ravaged by storms recently.

If the court allows liquidation, Sunra likely will put the Jamaica lot up for sale, and the Big Island property will be put up for auction.

Hawaii National Bank has been seeking about $9 million through a foreclosure, citing default on loan payments. If there is no bidder, the creditor, Hawaii National Bank, will then own the Big Island property.

“;If they're lucky, they can sell it,”; Hogan said.

The developer won subdivision approval in 2008 and invested about $29 million in improvements.

Since then sales have not gone through due to foreclosure proceedings.

Sunra subsequently filed for bankruptcy in order to resume sales efforts. Its creditors include two landscaping companies, a construction company and a coffee plantation management firm in Jamaica.

Hogan said the request to convert to Chapter 7 bankruptcy isn't a surprise to all involved, including the court.

“;There was no chance that we could do something that the debtor couldn't do,”; Hogan said.

“;We kicked the tires of it, looked at it and decided there's not much there to operate with.”;