Judge Orders Trustee For Hawaiian AirlinesAirline's Creditors Score Win In CourtPOSTED: 3:19 p.m. HST May 16, 2003 HONOLULU -- A federal bankruptcy judge Friday ordered an independent trustee be appointed to run Hawaiian Airlines.
The order by U.S. Bankruptcy Judge Robert J. Faris effectively approves Boeing Capital's request to replace the financially troubled carrier's management.
The judge said that the benefits of appointing a trustee outweigh any potential detriment.
Faris said the main reason he felt a trustee should take over Hawaiian was the behavior of Chief Executive Officer John W. Adams.
Adams brought in investors to save Hawaiian after its last bankruptcy, but after Sept. 11, 2001 and the failed merger with Aloha Airlines, the judge said Hawaiian was still in very poor shape. Adams got the airline's board to approve spending $25 million of the airline's cash to buy back stock, mostly from Adams and his partners.
Faris said "management failed" and "cannot be trusted to carry out it's fiduciary duty to creditors."
Adams had offered to resign as chairman and chief executive officer of Hawaiian Airlines in an effort to keep a trustee from being appointed.
Hawaiian officials contended that appointing a trustee might kill the airline.
The appointment of a trustee will likely result in the removal Adams.
Boeing was not the only creditor demanding Adams leave or be replaced. A committee of creditors said that if he didn't leave there would be people waiting in line to either buy or invest heavily in the airline.
Boeing said Friday's ruling is likely to spark the interest of new investors.
"They'll have money coming in from some equity participants and then we we all work together to provide temporary relief to get Hawaiian thorugh these bad times," said Anil Patel of Boeing Capital.
Among suggested trustee candidates is former Hawaiian CEO Paul Casey. The selection will be made by the office of the bankruptcy trustee. The process is expecte to take at least a week.
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