Categorized | Business

Hokulia reorganization plan approved by bankruptcy court

MEDIA RELEASE

Sun Kona Finance LLC, the investment firm that acquired Bank of Scotland’s loans to the long‐stalled Hokulia project, and debtors 1250 Oceanside Partners, Pacific Star Company LLC, and Front Nine’s Joint Consolidated plan of reorganization under Chapter 11 has been approved by the U.S. Bankruptcy Court Judge Robert J. Faris.

The reorganization plan allows the Hokulia project to emerge from bankruptcy and permit the respective creditors to receive payments on a proportional basis to their claims from a newly formed unsecured creditors fund.

“With the bankruptcy restructuring plan approved and financing in place, the West Hawaii community will see a new Hokulia emerge,” said Craig Pickett. “With the issuance of the court’s final written approval in a few weeks, Oceanside’s $20 million obligation to the County of Hawaii to complete the Mamalahoa Bypass Highway will be assured. Moving forward with the development and completion of the Hokulia project is our number one priority.”

Sun Kona Finance acquired Bank of Scotland’s loans in late 2012 and Pickett was installed to manage the debtor entities. In order to resolve secured and unsecured debt in accordance with the Bankruptcy Code, 1250 Oceanside and its affiliates commenced Chapter 11 bankruptcy proceedings in March 2013.

Last May, the Bankruptcy Court authorized the debtors to appoint Kona resident G. Rick Robinson as chief restructuring officer. Robinson has been actively involved in the development of the restructuring plan and will be administering the unsecured debtors fund.

The development, cultural and community plan submitted with the
reorganization plan affirmed the historical and cultural significance of these South Kona lands. The plan addressed the protection of cultural and historic sites, access rights of lineal and cultural descendants, the establishment of agricultural and cultural preserves and the importance of working collaboratively with State Historic Preservation Division, descendants and others.

West Hawaii’s community needs are also addressed within the development, cultural and community plan. The approved restructuring plan also includes community contributions of well more than $1.5 million to assist with construction of affordable housing, drug abuse prevention and scholarship initiatives.

The plan calls for Sun Kona Finance to fund a $65 million
line‐of‐credit exit loan to cover the debtors’ obligations to their
creditors under the plan and to cover operating shortfalls moving forward.

Hokulia Entities
Debtors in Bankruptcy

* 1250 Oceanside Partners, the developer of Hokulia owns lots and the remaining undeveloped areas.

* Front Nine LLC owns lots at Hokulia.

* Pacific Star Company LLC is the owner of the adjoining Keopuka property.

All three entities are in bankruptcy, have limited or no activities, and are not conducting any construction work.

Associations

There are a number of associations within the Hokulia Development that do not fall under Sun Kona, Oceanside, Front Nine or Pacific Star including The Club at Hokulia, Hokulia Community Association, Hokulia Park and Cultural Sites Association.

These are not in bankruptcy, are controlled by various individual lot owners and have independent management and boards of directors.

The Club at Hokulia controls the golf course and amenities, Hokulia
Community Association is in charge of the subdivision’s common areas and the Hokulia Park and Cultural Sites Association controls and manages the shoreline park, historic sites, burials and trails.

Sun Kona Venture, LLC, the entity that controls Sun Kona Finance, is owned by two prominent investors, William A. Pope, owner and president of SunChase Holdings and Samuel Robson (Rob) Walton, through one of his entities, Lake Avenue Investments, LLC. Walton is the chairman of the board of directors of Walmart.

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