KAILUA-KONA, Hawaii (AP) - Officials in Hawaii are preparing to ask a federal bankruptcy judge to allow foreclosure proceedings to begin on 80 acres of oceanfront land on the state’s Big Island.
Hawaii County Mayor Billy Kenoi said the decision to begin the process gives the county more options as it prepares to build the long-awaited Mamalahoa bypass road in South Kona, West Hawaii Today (https://is.gd/EpGOaJ ) reported Tuesday.
“It’s putting on notice the bankruptcy court and the debtors that the county is moving ahead,” Kenoi said.
The Hawaii County Corporation Counsel will represent the county’s interest in a May hearing to confirm a bankruptcy plan by the debtor, 1250 Oceanside Partners.
Oceanside was part of a failed Hokulia luxury development that also included plans for the bypass road. The project ran into numerous setbacks, leading to bankruptcy.
In a 2012 settlement, Oceanside was ordered to pay the county $12.5 million and either build the road or pay another $20 million to the county. The $12.5 million already has been paid.
The foreclosure would be for land Oceanside used to secure the $20 million it still owes the county to build the bypass.
Sunday was the deadline for Oceanside to pay.
The hearing set for May was originally scheduled for April 2, but it was delayed last week. Public works director Warren Lee said bidders will get another month to prepare their proposals for the project.
Rick Robinson, chief restructuring officer for Oceanside, said the company is ready for the bankruptcy plan to be finalized.
“We desperately want to get out of bankruptcy,” he said. The company and its lender want to “start restoring life to the project,” Robinson said.
Under the 2012 settlement, Oceanside would be required to pay the county $12.5 million in cash if the company opted not to build the road. The settlement also would require Oceanside to secure another $20 million with a mortgage.
The restructuring plan calls for paying the county, not building the road. Oceanside filed the restructuring plan last September with fellow debtors Pacific Star Co. LLC and Front Nine, along with their lender, Sun Kona Finance 1 LLC.
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Information from: West Hawaii Today, https://www.westhawaiitoday.com
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