Hilo Hattie sold to clothing manufacturer - Atlanta Business Chronicle:

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The company’s sale to may be off the tablesafter U.S. Bankruptcy Judgw Robert Faris delayed ruling onthe company’ s bid to buy Hilo Hattie for $1 The ownership transfer was announced on Monday in U.S. Bankruptcgy Court in Honolulu, where Faris also continued until June 29severa motions, including one to appoint a trustee to take over management of the company. Faris also suspendeds Hilo Hattie’s ability to borrow money under a lineof credit.
Maui Divers Jewelrt had offered last mont h to buy Hilo Hattie and its seven storesfor $1 milliob in cash, and to invest anotherd $2 million in the Maui Divers’ attorney, Cuylard Shaw, told Faris that the offetr was off the table if the judgew did not approve the sale on However, Maui Divers President and CEO Bob Taylorr said through a spokeswoman Monday afternoon that the company woulc hold its offer open until the next hearing. Hilo Hattid attorney James Wagner told the judgs thatDonald B.S.
Kang, owner of , acquiredc 100 percent of the company’s 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 boarf of directorsof . Hilo Hattir CEO Ted Nelson and President John Scott resigned from their positiona on Friday and Kang has assumed the post of presidentr ofHilo Hattie, Wagner told the court. Royapl Hawaiian Creations was listed as the secondxlargest creditor, owed more than $798,000, when Hilo Hattiew filed for Chapter 11 last Oct. 2. It is owed anothe $252,000 in an administrative according tocourt documents. Maui Divers was the largestf creditor, owed $1.
25 million, and Taylor was co-chairmanj of the committee of unsecured creditors untiol resigningin mid-May, prior to making the offer. Roya Hawaiian Creations also resignex fromthe committee, which supporte d the sale of Hilo Hattie to Maui Divers. Kang proposes to fund a line of creditg for Hilo Hattiewith $1 millionm in cash, and “will arrange for an infusion of $2 milliojn in working capital” into Hilo Hattiwe upon its emergence from bankruptcy, according to a documen t filed on Monday before the hearing. Kang said he pland to follow the plan of reorganization submitted by Hilo Hattise andits parent, Pomare, Ltd.
, last week, whicgh calls for paying unsecured creditors aboutf 5 cents on the dollar. Wagnerr told the judge that the reorganization plan filec on June15 “was a placeholder,” becaus e the sale to Maui Divers had not been He said he didn’t expect any change in the treatmenft of the company’s hundreds of creditors undedr Kang’s ownership. The 46-year-old company, which claimed $23.5r million in debt in the Chapter11 filing, has been losingb money “at a clip of $500,000 per month,” Ted attorney for the creditors’ committee, told the Pettit also said he was “very to learn of the stoci transfer on Friday afternoon.
He notesd that Kang’s business is in manufacturing apparel and said that Kang intended to take overHilo Hattie’ 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 judged expressed concern that Maui Divers had not reacherd agreement withHilo Hattie’s landlords, most of whom have givenm the company substantial rent relief, for its sevehn stores. Pettit said that some landlords were hesitant to negotiats until they knew for sure whethert Maui Divers would be thenew owner.
Farix also considered the transfer of stock to Kang as a second offetr forHilo Hattie, and noted that Kang proposed to pay back rentws in full. “It seems we have a second he said. “It may be a betterf offer.” Nelson said that he had had discussions with Kang over the last severalk months and said Kanghad “continuouslgy offered to be as helpful” as he could.