As difficult as it is to imagine, things are getting rough in Hawaii. Forget the ocean breezes, the beautiful sites, the beach. Monday was a bad one, with bankrupt Aloha Airlines Inc. converting
its case from Chapter 11 to Chapter 7.
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The Honolulu-based airline was forced to shut down its air cargo division, which had carried 85% of Hawaii's inter-island cargo, after GMAC Commercial Finance LLC pulled the plug on the use of cash collateral because GMAC was not guaranteed a minimum of $20 million.
Jupiter Holdings Inc., a group of Hawaiian investors, made a final offer of $13.65 million in cash and agreed to buy $5 million in receivables. However, GMAC balked, and Jupiter withdrew from the bidding. Aloha then elected to convert its case to Chapter 7. According to courtroom minutes from Monday's hearing, a Chapter 7 trustee will now be appointed.
Based on an article in the Honolulu Star Bulletin, U.S. bankruptcy Judge Lloyd King at Monday's hearing said, "We've known for quite some time this was a day-by-day case ... and that what happened today was a possibility, but because it's a grim possibility, it still takes us by surprise. I'm sorry for the hardship this bankruptcy case has imposed on so many people. I've been a bankruptcy judge since 1975, and I've never seen anything like this."
The Deal's Terry Brennan will have more information about Aloha's conversion of its case and its decision to shut down its air cargo business later in The Daily Deal and TheDeal.com. - Jamie Mason
Read more about Aloha Airlines at TheDeal.com
