Wednesday, June 24, 2009

Latest on the bankruptcy: Couple of good articles and one great blog post

Kaija Wilkinson in Alabama and Derrick DePledge in Honolulu put out a couple of good articles today:

Government to repossess Hawaii Superferry boats built at Austal - Birmingham, AL, USA
By KAIJA WILKINSON The US Maritime Administration says that it plans to repossess and sell a pair of fast ferries built at Austal USA for Hawaii Superferry ...

Hawaii Superferry wants to abandon both its catamarans
Honolulu Advertiser - Honolulu, HI, USA
By Derrick DePledge Hawaii Superferry has asked to abandon its two high-speed catamarans to creditors because of the significant cost of maintaining the ...

But, even better was the blog post by Ian Lind:

Tuesday…City rail symposium disappoints, and documents from furlough lawsuit and Superferry bankruptcy
By Ian Lind
Then a few tidbits from the Hawaii Superferry bankruptcy case: The State of Hawaii’s motion to move the case back to the islands, a copy of the Superferry’s security agreement with the Federal Maritime Administration, and an affidavit by the corporate secretary filed for the opening bankruptcy hearing spelling out the company’s financial structure. ...

Ian provides the above links to three interesting documents.

Of note, in "the company’s financial structure" linked document, the chronology of events presented for August 2007 are materially incomplete: "...Thereafter, in August, 2007, the Alakai began transporting passengers and vehicles between the Islands. The special interest plaintiffs appealed the matter to the Hawaii Supreme Court, which, in its August 31, 2007 decision, held that DOT erred in holding that the DOT improvements were exempt from the requirements of Chapter 343."

The Supreme Court's oral opinion came down actually on August 23rd, 2007. The above linked filing makes it seem like the company started operations and then the Supreme Court ruled, when in fact, the Supreme Court decision came down first and the company ignored it and initiated expedited operations anyway on August 26th and only stopped a couple days later when a restraining order was issued by Circuit Court.

In the "motion to move the case back" linked document regarding the fact that HSF voluntarily ceased operations and that the complete Harbors Operating Agreement was not formally voided by a Court nor the State, here's the key quote from the State's Motion to move the case to Hawaii:

"Moreover, the validity of the Harbors Operating Agreement depends solely upon interpretation of relevant Hawaii state law.[3] -- [3] By way of further explanation, there are several complex issues surrounding the Harbors Operating Agreement that are relevant to the Debtors' bankruptcy, including: (1) whether the Hawaii Supreme Court's decision renders the Harbors Operating Agreement void ab initio in light of Superferry's performance pursuant to the terms of the agreement between the passage of Act 2 and the Hawaii Supreme Court's decision; (2) that the Hawaii Supreme Court had yet to enter any judgement with respect to its March 16, 2009 decision and that the prior injunction issued by the lower court with respect to the declaration that the Harbors Operating Agreement was void as to the Island of Maui was set aside, and therefore, in light of the automatic stay there is no current order on record which addresses the Harbors Operating Agreement, thus making Superferry's cessation of business operations on March 16, 2009 essentially voluntary in nature; and (3) the treatment of the State's claims under the Harbors Operating Agreement during those periods in which Superferry operated pursuant to the terms of the Agreement and was not otherwise prohibited by any court order or judgement."

Lastly, of lesser importance, on a side note, in "the company’s financial structure" it is interesting to note the detailed description of the company's Cash Management Accounts including with (no doubt former) account numbers and a good description of the "sweep" process. It is interesting to note that those type of "sweep" accounts were an innovation brought to Hawaii by Bank of America and apparently later adopted by Bank of Hawaii, the institution mentioned in the above linked document.

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