HILO — The Honolulu attorneys for the bank that loaned Ken Fujiyama’s bankrupt Hawaii Outdoor Tours Inc. $10 million for construction at Hilo’s Naniloa Volcanoes Resort is alleging the company violated a court order allowing it to use cash collateral
HILO — The Honolulu attorneys for the bank that loaned Ken Fujiyama’s bankrupt Hawaii Outdoor Tours Inc. $10 million for construction at Hilo’s Naniloa Volcanoes Resort is alleging the company violated a court order allowing it to use cash collateral of secured creditors in its operations.
A hearing is scheduled for Monday morning before U.S. Bankruptcy Judge Robert Faris in Honolulu to decide whether the company can continue using the cash collateral on a permanent basis, as well as to decide other issues surrounding the company’s Chapter 11 reorganization filing.
Attorney Ryan Hamaguchi has filed an objection on the use of cash collateral on behalf of First-Citizens Bank & Trust Co. of North Carolina.
“I don’t think we did anything wrong,” Fujiyama said on Friday.
Hamaguchi wants to know how a $10,000 check payable to cash and checks made out to Fujiyama’s wife and company president, Lee Harlow, for more than $4,000 were spent.
The bank’s attorneys also allege Fujiyama has not complied with the court’s order to produce documentation. The objection states that Fujiyama’s company produced 2,934 pages on time, but 1,874 pages were late.
Other allegations include deficiencies in cash flow projections, projected revenues, unexplained payroll increases and an incomplete budget.
The document alleges that the hotel has failed to pay its creditors, necessary taxes and expenses, and hasn’t made lease payments to the state.
The bank is objecting to the company’s use of secured creditors’ cash collateral to pay lawyers.
First-Citizens sued to foreclose on the loan in August, claiming that Fujiyama’s company was in default and owed more than $9.9 million on the loan.
The bankruptcy petition claims debts of between $10 million and $50 million. The company is also claiming assets of between $50 million and $100 million.
Fujiyama acquired the 382-room Naniloa and its nine-hole golf course in a 2006 auction for a 65-year lease of the state property with a bid of $500,000 a year. The lease also required Fujiyama to pay $6.1 million to the previous lessee, a Japanese firm.
