The Naniloa Volcanoes Resort could soon be in new hands. The Naniloa Volcanoes Resort could soon be in new hands. ADVERTISING On Nov. 6, a federal bankruptcy judge will consider a motion to sell the troubled Hilo hotel following the
The Naniloa Volcanoes Resort could soon be in new hands.
On Nov. 6, a federal bankruptcy judge will consider a motion to sell the troubled Hilo hotel following the submission of sealed bids last Friday, said David Farmer, the Naniloa’s bankruptcy trustee.
Three bids were submitted with two meeting bid qualifications, he said.
The top qualifying bid will be up for consideration at the hearing.
Farmer said he couldn’t discuss who submitted the bids and how much is being offered beforehand.
But he said the top bid does not offer enough to cover all of the hotel’s debts. The approximately $1.6 million owed in lease payments to the state Department of Land and Natural Resources as well as taxes to Hawaii County and the state would be covered.
“This one, I can confirm, would be a short sale,” Farmer said. “The sale of collateral nets less than what is owed.”
He doesn’t expect that to stay unchanged.
Farmer said other bids will be accepted at the Nov. 6 hearing, giving other potential buyers a chance to make a better offer.
“Everybody sees the cards,” he said.
At the hearing, Farmer said he would also seek to attain the DLNR lease and be able to transfer it to a successful bidder.
The court was scheduled to make a decision Monday on whether to allow the bankruptcy estate to take over the lease. That was put on hold after the bids came in, Farmer said.
Any buyer of the 383-room hotel and nine-hole golf course on Banyan Drive would likely have their work cut out for them.
The hotel has racked up about two dozen building code violations with the county and is likely in need of substantial investment to bring it up to par.
A wing remains closed after being gutted during previous renovations and the kitchen is also closed.
Hawaii Outdoor Tours Inc., which won a 65-year lease with DLNR at auction in 2006, currently owns the hotel.
The company had defaulted on a $10 million loan it used to acquire the hotel and went into foreclosure in August 2012.
That was put on hold when the company filed for bankruptcy last November.
Email Tom Callis at tcallis@hawaiitribune-herald.com.
