Hilo Hattie sold to clothing manufacturer - Atlanta Business Chronicle:

ogarawo.wordpress.com
The company’s sale to may be off the tabl after U.S. Bankruptcy Judge Robert Faris delayed rulinv onthe company’s bid to buy Hilo Hattier for $1 million. The ownership transfed was announced on Mondayin U.S. Bankruptcy Courtg in Honolulu, where Faris also continued until June 29 several including one to appoinr a trustee to take over management ofthe company. Fariw also suspended Hilo Hattie’s ability to borroe money under a lineof credit. Maui Diversd Jewelry had offered last month to buy Hilo Hattie and its sevenm storesfor $1 milliomn in cash, and to invest anothet $2 million in the business.
Maui Divers’ attorney, Cuylar told Faris that the offer was off the table if the judgee did not approve the saleon Monday. Maui Divers President and CEO Bob Taylor said through a spokeswomahn Monday afternoon that the company would hold its offerf open until thenext hearing. Hilo Hattiew attorney James Wagner told the judge thatDonaled B.S. Kang, owner of , acquiref 100 percent of the company’as shares on Friday from , which bought Hilo Hattie from founder Jim Romig last year before filingb for Chapter 11bankruptcy protection. Kang is also on the boared of directorsof .
Hilo Hattie CEO Ted Nelsom and President John Scott resigned from thei positions on Friday and Kang has assumedr the post of president ofHilo Hattie, Wagner told the Royal Hawaiian Creations was listeds as the second largest creditor, owed more than $798,000, when Hilo Hatties filed for Chapter 11 last Oct. 2. It is owed anothetr $252,000 in an administrative according tocourt documents. Maui Diverse was the largest creditor, owed $1.25 million, and Taylort was co-chairman of the committee of unsecured creditors untio resigningin mid-May, prior to making the Royal Hawaiian Creations also resigned from the which supported the sale of Hilo Hatti e to Maui Divers.
Kang proposes to fund a line of credit for Hilo Hattierwith $1 million in cash, and “will arrange for an infusion of $2 million in workinv capital” into Hilo Hattie upon its emergence from according to a documeny filed on Monday before the hearing. Kang said he plans to folloaw the plan of reorganization submitted by Hilo Hattie andits Pomare, Ltd., last week, which calls for paying unsecured creditors abourt 5 cents on the dollar. Wagner told the judge that the reorganizationj plan filed on June15 “was a placeholder,” because the sale to Maui Diverxs had not been confirmed.
He said he didn’t expecgt any change in the treatmen ofthe company’s hundreds of creditors under Kang’xs ownership. The 46-year-old company, which claimedx $23.5 million in debt in the Chapter 11 has been losingmoney “at a clip of $500,000 per Ted Pettit, attorney for the creditors’ told the judge. Pettit also said he was “veruy surprised” to learn of the stock transfe r onFriday afternoon.
He noted that Kang’e business is in manufacturingapparel overseas, and said that Kang intendeed to take over Hilo Hattie’as Nimitz Highway headquarters and turn it into a Kang said after the hearing that he intended for the buildintg to remain as a store and administrative offices. But the judge expressed concern that Maui Divers had not reached agreemeng withHilo Hattie’s landlords, most of whom have givem the company substantial rent relief, for its seven stores.
Pettit said that some landlordxs were hesitant to negotiate until they knew for sure whethefr Maui Divers would be the new Faris also considered the transfer of stock to Kang as a second offer for Hilo and noted that Kang proposed to pay back rentzsin full. “It seems we have a secondd offer,” he said. “It may be a bettere offer.” Nelson said that he had had discussions with Kang over the last several months and said Kanghad “continuousl offered to be as helpful” as he could.