Land Board Orders Naniloa to Restore $1 Million Bond
It’s been a tough month for Naniloa Volcanoes Resort owner Ken Fujiyama.
On Friday, May 10, the state Board of Land and Natural Resources voted to require that Fujiyama’s company, Hawaii Outdoor Tours, must pay $500,000 to restore its performance bond to its original amount of $1 million.
In 2011, the land board granted Fujiyama’s request to use half of the bond to pay overdue lease payments.
However, a condition of that arrangement was that the board could order him to bring the bond back to its original amount if the Naniloa was again in default of any conditions of its state lease.
The hotel was found delinquent on rent again in March 2012. Although the hotel’s mortgage-holder, First Citizens Bank & Trust, eventually made good on that payment, that meant the Naniloa was again in default of its lease which triggered last Friday’s board action.
Neither Fujiyama nor the bank’s attorneys could be reached to determine how the bond would be made whole.
To protect its interests, First Citizens has been covering recent lease payments.
And on Thursday, Third Circuit Judge Greg Nakamura ruled on a foreclosure action filed by First Citizens in August 2012, saying that Hawaii Outdoor Tours owes the bank $10.7 million on what was originally a $10 million loan.
However, further foreclosure actions apparently remain on hold because of Hawaii Outdoor Tours’ Nov. 20, 2012 filing for reorganization of its debts through Chapter 11 bankruptcy.
On March 20, Fujiyama filed a 132-page reorganization plan calling for the Naniloa to repay creditors over a five-year period using revenues from the operation of the Banyan Drive hotel and golf course, or from the possible sale or refinancing of the Naniloa property.
Fujiyama reportedly said this week that he would sell other assets and not the Naniloa to satisfy those debts.
In a “disclosure statement” filed with the reorganization plan, Fujiyama said he intended to transfer 1,952 acres of land in Ka`u owned by another of his companies, Ken Direction Corp., to the Naniloa for “additional collateral” for First Citizens.
However, the March 20 disclosure statement also said he intends to submit the property for the county to purchase under its open lands program funded by the annual appropriation of 2% of property tax revenue.
The statement said the property is “conservatively” worth $8 million.
The shoreline property, which contains a volcanic feature known as the “Great Crack,” was previously the subject of tentative acquisition by Hawaii Volcanoes National Park, which it abuts.
Park officials said a deal was almost reached on the park’s purchase of the property in 2000 until Fujiyama changed the terms.
Since then, park Superintendent Cindy Orlando told Big Island Now, the park has again attempted to acquire the parcel but Fujiyama has maintained the property is worth “far more” than the amount determined by appraisals conducted by the National Park Service.
In other recent developments, Wagner Choi & Verbrugge, the Honolulu law firm that has represented Fujiyama during the bankruptcy, on April 29 asked bankruptcy Judge Robert J. Faris for permission to withdraw from the case.
Citing “irreconcilable differences” regarding the future course of the case, the law firm requested and received an expedited hearing on its motion to withdraw as Fujiyama’s counsel.
The motion to withdraw was granted on May 7.
Maui attorney Ramon J. Ferrer has since taken over as Fujiyama’s attorney.
Earlier this month, Faris also appointed David Farmer as trustee for the Naniloa bankruptcy.