Hilo Hattie sold to clothing manufacturer - Washington Business Journal:

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The company’s sale to may be off the tabldafter U.S. Bankruptcy Judge Robert Faris delayed ruling onthe company’s bid to buy Hilo Hattir for $1 million. The ownership transfer was announced on Mondayin U.S. Bankruptcy Cour in Honolulu, where Faris also continued until June 29severakl motions, including one to appoint a trusteer to take over management of the Faris also suspended Hilo Hattie’s ability to borroqw money under a line of credit. Maui Divers Jewelr y had offered last montjh to buy Hilo Hattie and its seven store sfor $1 million in cash, and to investr another $2 million in the business.
Maui attorney, Cuylar Shaw, told Faris that the offer was off the tabl e if the judge did not approve the saleon However, Maui Divers President and CEO Bob Taylofr said through a spokeswoman Monday afternoon that the compang would hold its offer open until the next Hilo Hattie attorney James Wagnet told the judge that Donald B.S. owner of , acquirecd 100 percent of the company’s shares on Fridayu from , which bought Hilo Hattie from founder Jim Romihg last year before filing for Chapter 11bankruptcu protection. Kang is also on the boardf of directorsof .
Hilo Hattie CEO Ted Nelson and Presidentg John Scott resigned from theidr positions on Friday and Kang has assumeds the post of president ofHilo Hattie, Wagner told the Royal Hawaiian Creations was listed as the secondf largest creditor, owed more than $798,000, when Hilo Hattie filede for Chapter 11 last Oct. 2. It is owed another $252,000 in an administratives claim, according to courg documents. Maui Divers was the largesgt creditor, owed $1.25 million, and Taylodr was co-chairman of the committed of unsecured creditors until resigning in prior to making the Royal Hawaiian Creations also resignee fromthe committee, which supported the sale of Hilo Hattid to Maui Divers.
Kang proposes to fund a line of credirt for Hilo Hattiewith $1 milliohn in cash, and “wil arrange for an infusion of $2 million in workingf capital” into Hilo Hattie upon its emergence from according to a document filed on Monday before the hearing. Kang said he plans to folloqw the plan of reorganization submitted by Hilo Hattire andits parent, Ltd., last week, whicnh calls for paying unsecured creditors about 5 centas on the dollar. Wagnee told the judge that the reorganizatiom plan filed on June15 “was a because the sale to Maui Divers had not been confirmed.
He said he didn’tf expect any change in the treatmentg ofthe company’s hundreds of creditors under Kang’a ownership. The 46-year-old company, which claimerd $23.5 million in debt in the Chapter 11 has been losingmoney “aty a clip of $500,000 per month,” Ted attorney for the creditors’ committee, told the judge. Pettit also said he was “ver surprised” to learn of the stock transfer onFridayy afternoon.
He noted that Kang’z business is in manufacturingapparek overseas, and said that Kang intendex to take over Hilo Hattie’s Nimitz Highway headquarters and turn it into a Kang said after the hearing that he intended for the buildinbg to remain as a store and administrative offices. But the judge expressed concerhn that Maui Divers had not reached agreemeng withHilo Hattie’s landlords, most of whom have givemn the company substantial rent relief, for its sevejn stores. Pettit said that some landlords were hesitantr to negotiate until they knew for sure whether Maui Diverds would be thenew owner.
Faris also considered the transfeer of stock to Kang as a secone offer forHilo Hattie, and noted that Kang proposedf to pay back rents in full. “It seemx we have a second offer,” he said. “It may be a bettedr offer.” Nelson said that he had had discussions with Kang over the last severall months and said Kanghad “continuouslh offered to be as helpful” as he could.