Naniloa’s bankruptcy trustee should not assume lease, county and state say


A request by Naniloa Volcanoes Resort’s bankruptcy trustee to assume the hotel’s lease is being opposed by both Hawaii County and the state over its ongoing financial problems and failure to meet building codes.

The county and state Attorney General’s Office filed separate motions against the request late Monday in federal bankruptcy court.

The court in Honolulu is scheduled to consider the issue Oct. 21. A deadline for interested buyers to submit sealed bids for the troubled 383-room hotel and nine-hole golf course on Banyan Drive has been set for Oct. 18.

According to the motions, the hotel owes $504,791 in state taxes, $263,000 in rent to the state Department of Land and Natural Resources, $411,430 in property taxes, as well as some utilities.

A performance bond is also $500,000 below what the lease with DLNR requires.

By assuming the lease, the trustee would be required to cover all outstanding payments associated with the lease.

Both the county and state say the trustee does not have enough cash to cover the payments.

The state’s motion says the trustee’s August monthly operating report showed $168,555 in the account.

Another $100,000 the trustee has received for bridge financing will also fall short, the motions say.

Inspections by the county earlier this year also found 24 violations of the building, electrical and plumbing codes.

 

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