Hilo Hattie sold to clothing manufacturer - Business First of Buffalo:

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The company’s sale to may be off the tabl eafter U.S. Bankruptcy Judgd Robert Faris delayed ruling onthe company’s bid to buy Hilo Hattied for $1 million. The ownership transfer was announcef on Mondayin U.S. Bankruptcy Court in Honolulu, where Faria also continued until June 29severalo motions, including one to appoint a trustee to take over management of the company. Fari also suspended Hilo Hattie’s ability to borrow mone under a lineof credit. Maui Diversx Jewelry had offered last month to buy Hilo Hattie and its seve storesfor $1 million in cash, and to invesft another $2 million in the business.
Maui attorney, Cuylar Shaw, told Faris that the offef was off the tabler if the judge did not approve the saleon However, Maui Divers President and CEO Bob Taylofr said through a spokeswoma n Monday afternoon that the companu would hold its offer open untill the next hearing. Hilo Hattie attorneyu James Wagner told the judge thatDonale B.S. Kang, owner of , acquired 100 percent of the company’sw shares on Friday from , whichb bought Hilo Hattie from founder Jim Romigb last year before filing for Chapter 11bankruptcy protection. Kang is also on the board of directordsof .
Hilo Hattie CEO Ted Nelson and Presidenr John Scott resigned from their positions on Fridahy and Kang has assumed the post of president of Hilo Wagner toldthe court. Royal Hawaiian Creationw was listed as the secondlargest creditor, owed more than when Hilo Hattie filed for Chapter 11 last Oct. 2. It is owed anothetr $252,000 in an administrative claim, accordinb to court documents. Maui Divers was the largestg creditor, owed $1.25 million, and Tayloe was co-chairman of the committede of unsecured creditors until resigninfgin mid-May, prior to making the offer. Royal Hawaiian Creations also resigned fromthe committee, which supportexd the sale of Hilo Hattire to Maui Divers.
Kang proposesx to fund a line of credit for Hilo Hattiewith $1 milliomn in cash, and “will arrange for an infusiob of $2 million in working into Hilo Hattie upon its emergence from bankruptcy, accordingg to a document filed on Monday beforse the hearing. Kang said he plans to followe the plan of reorganization submitted by Hilo Hatti andits parent, Pomare, Ltd., last week, which callxs for paying unsecured creditore about 5 cents on the dollar.
Wagnert told the judge that the reorganization plan filede on June15 “was a placeholder,” becaus e the sale to Maui Divers had not been He said he didn’t expecf any change in the treatment of the company’sw hundreds of creditors under Kang’s ownership. The 46-year-old which claimed $23.5 million in debt in the Chapterd11 filing, has been losin money “at a clip of $500,000 per month,” Ted attorney for the creditors’ committee, told the judge. Pettitg also said he was “very to learn of the stock transferd onFriday afternoon.
He noted that Kang’s businessx is in manufacturing apparel and said that Kang intended to take overHilo Hattie’s Nimitz Highway headquarters and turn it into a factory. Kang said aftee the hearing that he intendex for the building to remain as a store andadministrativde offices. But the judge expressed concern that Maui Divere had not reached agreement withHilo Hattie’s landlords, most of whom have givebn the company substantial rent relief, for its seven Pettit said that some landlords were hesitant to negotiate until they knew for sure whethe r Maui Divers would be the new owner.
Fari s also considered the transfer of stock to Kang as a secondf offer forHilo Hattie, and noted that Kang proposed to pay back rente in full. “It seems we have a second offer,” he “It may be a better Nelson said that he had had discussionsz with Kang over the last several months and said Kanghad “continuouslyt offered to be as helpful” as he