The federal Maritime Administration won the bidding at a Sept. 30 foreclosure sale
POSTED: 01:30 a.m. HST, Oct 12, 2010
There were lots of extras to interest buyers -- furniture, apparel, tools, machinery and spare parts. But no one was willing to outbid the federal government for the two former Hawaii Superferry high-speed catamarans at a recent foreclosure auction.
The U.S. Department of Transportation's Maritime Administration was the high bidder at a Sept. 30 auction outside the federal courthouse in Norfolk, Va.
The auction, which was confirmed by a U.S. District Court judge last week, transferred ownership to the agency to settle loan guarantees the agency made to help finance construction of the ships.
The Maritime Administration has been in possession of the two vessels, the Alakai and Huakai, since July 2009, two months after Hawaii Superferry Inc. filed for bankruptcy.
The Superferry ceased service between Oahu and Maui with the Alakai in March 2009, following a ruling by the Hawaii Supreme Court. The Huakai had yet to be put into service.
Maritime Administration officials could not be reached yesterday to comment on the auction results or say what they plan to do with the ships.
Since taking possession of the Alakai and Huakai last year, the agency put the ships into temporary service, providing aid to Haiti following a devastating earthquake in January. The military also had expressed interest in possibly leasing the vessels.
Presently, the Alakai and Huakai are laid up at Lambert's Point Docks in Norfolk for safekeeping, according to court records.
Hawaii Superferry was formed in 2002 to provide ferry service with a cruise-line atmosphere between Oahu, Maui, Kauai and the Big Island with a capacity of 866 passengers and 282 cars per ship at speeds approaching 40 knots, or 46 mph.
But the company encountered major problems, including legal challenges and inconsistent service.
State legislators passed a law in 2007 designed to allow the company to operate after a series of successful state court challenges.
The Hawaii Supreme Court struck down the law, ruling that it was intended to benefit a specific party, in violation of the state Constitution.
The Superferry shut down on March 16, 2009.
After filing for bankruptcy on May 30, 2009, Hawaii Superferry agreed to turn over the ships to the Maritime Administration.
The agency had provided two loan guarantees totaling roughly $140 million to help finance the $190 million construction cost of the two ships. The agency paid its roughly $140 million obligation to investors and lenders in December, and sued to foreclose on its interest in the ships as a first-priority mortgage holder.
The agency submitted a $25 million bid for each ship at the auction conducted by the U.S. Marshals Service. No one bid higher, according to court records.
No money is transferring hands with the sale. The agency used the value of its mortgage to back up its bid for the ships. The agency could have driven bidding up to nearly $140 million in total.
Austal USA, the Alabama shipbuilder that built the vessels, and the state of Hawaii, which provided $40 million in harbor improvements, held second and third mortgages.
Austal USA was owed $23 million.
J.F. Lehman & Co., which was founded by former Navy Secretary John Lehman, was the largest private investor in the project. Lehman's firm, which owns the shipyard that built the Superferry ships, invested $85.2 million in the business.