By TOM CALLIS
Tribune-Herald staff writer
The gauntlet has been thrown for interested buyers of the beleaguered Naniloa Volcanoes Resort.
Colliers International Hawaii, which is listing the 383-room hotel on Hilo’s Banyan Drive for sale, has set a deadline of Oct. 18 for sealed bids to be submitted, said David Farmer, the hotel’s bankruptcy trustee.
“We’re trying to put some discipline on the process and hopefully get people to put up or shut up,” he said.
The hotel has been in bankruptcy since last November after being unable to cover loan payments or pay all of its bills.
Its debts include $250,000 to the state Department of Land and Natural Resources for lease payments and more than $400,000 to Hawaii County for property taxes.
If no bids are submitted by the deadline, it will likely be up to the mortgage-holder, First Citizens Bank & Trust Co., to decide whether to acquire the hotel through a credit bid, Farmer said.
“The bank is prepared to do that if they must,” he said.
Farmer said he has spoken with “five or six” investors interested in the property but no one has made an offer.
“At least one has gone cool on us,” he said.
On Oct. 21, the federal bankruptcy court in Honolulu will also consider allowing the bankruptcy estate to assume the DLNR lease. That move would also require payment to DLNR for what it owes on the lease.
Farmer said the hope is to have a buyer selected and be able to transfer the lease to them at that time.
If no buyer is found, an extension will be requested, he said.
On Tuesday, Hawaii County had sent building inspectors to the hotel, Farmer said, but it is unclear what was the result of the inspection.
Mayor Billy Kenoi didn’t immediately return a phone call late Wednesday afternoon.
On Wednesday, the County Council approved the hiring of legal counsel to represent the county as it seeks payment of the taxes and unpaid fees.
Corporation Counsel Lincoln Ashida said the county will be hiring Jerrold Guben of Honolulu.
The council approved $25,000 for the contract. Ashida said Guben has been working pro bono for a couple weeks.
Ashida and Katherine Garson, assistant corporation counsel, both said the county needs the additional legal help due to the complexities of bankruptcy law.
“The reason why we need special counsel is we’re testing our limits here,” Garson told the council.
The council vote was 6-1.
Hilo Councilman Dennis Onishi and Hamakua Councilwoman Valerie Poindexter were both absent.
Ka‘u/South Kona Councilwoman Brenda Ford voted no, citing concerns over how much that tab may increase.
“I think we’re sticking our nose into a state issue with taxpayer dollars and I’m not supporting this,” she said.
Ashida said that amount may increase but the council will have to approve any additional allocations.
Email Tom Callis at firstname.lastname@example.org.