Erndogg
Well-known member
- Joined
- Aug 27, 2004
- Posts
- 211
Hawaiian to get less
than $4M from ousted
CEO’s companies
John Adams and his affiliates will
pay $3.6 million over a lawsuit that
initially sought $28 million
By Dave Segal
[email protected]
Bringing closure to a lawsuit that has clouded the Hawaiian Airlines bankruptcy, former Chief Executive John Adams and his affiliated companies have agreed to pay the airline $3.6 million in a settlement over funds diverted from the carrier.
The amount was considerably less than the $28 million that Hawaiian Airlines trustee Joshua Gotbaum had sought when he sued Adams' companies in November 2003.
But company officials said negotiations revolved around roughly $3 million made in consulting agreements and other compensation to insiders and their interests rather than a controversial $25 million stock buyback that made payments to investors in the summer of 2002.
Arguments that Hawaiian's shareholders and creditors were harmed by the buyback have been diminished because its parent company's stock price is now nearly double the buyback's $4.25 price, and a proposed reorganization plan is offering unsecured creditors 100 percent on their claims.
Gotbaum, who was appointed in July 2003 to see the company through bankruptcy reorganization and to investigate Adams and his affiliates, was pleased with the outcome.
"This should close a sorry chapter in Hawaiian's history," Gotbaum said.
"Those funds will help complete our successful reorganization of Hawaiian."
The settlement requires approval by federal Bankruptcy Court. A hearing is set before Judge Robert Faris on Jan. 25 to determine whether to approve a reorganization plan for Hawaiian. The carrier has been in bankruptcy since March 21, 2003.
Under the settlement agreement, Adams and business partner Randy Smith disclaim any legal liability. The suit was filed against Adams; AIP LLC, which at the time was the controlling shareholder of Hawaiian Airlines parent Hawaiian Holdings Inc.; and consulting firm Smith Management LLC. Adams was the managing member of AIP and affiliated with Smith Management.
A statement issued yesterday on Adams' behalf by his attorney, Thomas X. Fritsch, said the settlement was in the best interest of all parties. Fritsch declined to provide details of the settlement until it is approved by Bankruptcy Court.
"John has tremendous respect for the people at Hawaiian and is pleased that the resolution of this litigation removes one more obstacle to Hawaiian Airlines' successful emergence from bankruptcy," Fritsch said.
The settlement, which has yet to be filed in Bankruptcy Court, comes about three months after Adams and AIP agreed to pay $2.47 million to settle Securities and Exchange Commission charges over the $25 million tender offer.
The SEC had charged Adams and AIP for failing to disclose important negative financial information to other Hawaiian shareholders in the stock buyback. The SEC came to its decision without charging Adams or AIP of fraudulent behavior and without their admission of any wrongdoing.
Although Adams, AIP and Smith Management did not admit to any wrongdoing in the new settlement, the defendants have now agreed to pay more than $6 million in settlements.
"I took the SEC settlement as further evidence that John Adams and his partner, Randy Smith, needed to reach agreements to resolve this dispute," Gotbaum said.
Gotbaum's suit against Adams and his affiliates was scheduled to be heard in Bankruptcy Court in June but the trustee said it was better to reach an out-of-court settlement.
"I decided to settle because settling avoided litigation costs which would have been well in excess of $1 million," Gotbaum said.
Faris, who ordered Adams removed from office in a May 2003 ruling, said the former executive consistently had placed the interests of the shareholders ahead of those of the creditors. Faris also criticized the tender offer.
The timing of that offer came several months after Hawaiian received a $30.1 million federal grant because of the Sept. 11, 2001, terrorist attacks. The payout also occurred at a time when Hawaiian's financial situation was allegedly deteriorating and at the same time that Hawaiian was seeking more than $20 million in leasing concessions from its three aircraft lessors.
Adams and his attorney said in the May 2003 trustee hearing that the airline went ahead with the tender offer because it felt its financial condition would be improving since it was entering its peak travel period and that the airline had ample cash on hand.
Adams sold his personal shares and his AIP stake in Hawaiian Holdings this past June.
I guess 3.6 Mill is better than nothing to fund our retirement that they underfunded for years while they were lining their pockets with Hawaiian's profits.
White collar crime at it's best in AMERICA!!!!
than $4M from ousted
CEO’s companies
John Adams and his affiliates will
pay $3.6 million over a lawsuit that
initially sought $28 million
By Dave Segal
[email protected]
Bringing closure to a lawsuit that has clouded the Hawaiian Airlines bankruptcy, former Chief Executive John Adams and his affiliated companies have agreed to pay the airline $3.6 million in a settlement over funds diverted from the carrier.
The amount was considerably less than the $28 million that Hawaiian Airlines trustee Joshua Gotbaum had sought when he sued Adams' companies in November 2003.
But company officials said negotiations revolved around roughly $3 million made in consulting agreements and other compensation to insiders and their interests rather than a controversial $25 million stock buyback that made payments to investors in the summer of 2002.
Arguments that Hawaiian's shareholders and creditors were harmed by the buyback have been diminished because its parent company's stock price is now nearly double the buyback's $4.25 price, and a proposed reorganization plan is offering unsecured creditors 100 percent on their claims.
Gotbaum, who was appointed in July 2003 to see the company through bankruptcy reorganization and to investigate Adams and his affiliates, was pleased with the outcome.
"This should close a sorry chapter in Hawaiian's history," Gotbaum said.
"Those funds will help complete our successful reorganization of Hawaiian."
The settlement requires approval by federal Bankruptcy Court. A hearing is set before Judge Robert Faris on Jan. 25 to determine whether to approve a reorganization plan for Hawaiian. The carrier has been in bankruptcy since March 21, 2003.
Under the settlement agreement, Adams and business partner Randy Smith disclaim any legal liability. The suit was filed against Adams; AIP LLC, which at the time was the controlling shareholder of Hawaiian Airlines parent Hawaiian Holdings Inc.; and consulting firm Smith Management LLC. Adams was the managing member of AIP and affiliated with Smith Management.
A statement issued yesterday on Adams' behalf by his attorney, Thomas X. Fritsch, said the settlement was in the best interest of all parties. Fritsch declined to provide details of the settlement until it is approved by Bankruptcy Court.
"John has tremendous respect for the people at Hawaiian and is pleased that the resolution of this litigation removes one more obstacle to Hawaiian Airlines' successful emergence from bankruptcy," Fritsch said.
The settlement, which has yet to be filed in Bankruptcy Court, comes about three months after Adams and AIP agreed to pay $2.47 million to settle Securities and Exchange Commission charges over the $25 million tender offer.
The SEC had charged Adams and AIP for failing to disclose important negative financial information to other Hawaiian shareholders in the stock buyback. The SEC came to its decision without charging Adams or AIP of fraudulent behavior and without their admission of any wrongdoing.
Although Adams, AIP and Smith Management did not admit to any wrongdoing in the new settlement, the defendants have now agreed to pay more than $6 million in settlements.
"I took the SEC settlement as further evidence that John Adams and his partner, Randy Smith, needed to reach agreements to resolve this dispute," Gotbaum said.
Gotbaum's suit against Adams and his affiliates was scheduled to be heard in Bankruptcy Court in June but the trustee said it was better to reach an out-of-court settlement.
"I decided to settle because settling avoided litigation costs which would have been well in excess of $1 million," Gotbaum said.
Faris, who ordered Adams removed from office in a May 2003 ruling, said the former executive consistently had placed the interests of the shareholders ahead of those of the creditors. Faris also criticized the tender offer.
The timing of that offer came several months after Hawaiian received a $30.1 million federal grant because of the Sept. 11, 2001, terrorist attacks. The payout also occurred at a time when Hawaiian's financial situation was allegedly deteriorating and at the same time that Hawaiian was seeking more than $20 million in leasing concessions from its three aircraft lessors.
Adams and his attorney said in the May 2003 trustee hearing that the airline went ahead with the tender offer because it felt its financial condition would be improving since it was entering its peak travel period and that the airline had ample cash on hand.
Adams sold his personal shares and his AIP stake in Hawaiian Holdings this past June.
I guess 3.6 Mill is better than nothing to fund our retirement that they underfunded for years while they were lining their pockets with Hawaiian's profits.
White collar crime at it's best in AMERICA!!!!
TC
