The local security firm files for Chapter 7 bankruptcy liquidation and lays off about 200
POSTED: 1:30 a.m. HST, Oct 22, 2010
Freeman Guards Inc., a private security company that provided guards to the University of Hawaii among other clients, filed for Chapter 7 liquidation bankruptcy yesterday and immediately ceased operations, leaving some 200 employees out of work -- employees who had missed two paychecks, according to Bankruptcy Trustee David Farmer.
They may not see those back wages for six months or more, he said.
Freeman's bankruptcy filing followed the collapse of a tentative purchase deal by global security firm Securitas.
"At the beginning of the week, the deal was done," and Freeman was going to file a prepackaged bankruptcy case, but "Securitas pulled the plug on Wednesday, so this was a crash-filing. It was not what was expected when the week started," Farmer said.
Freeman officials could not be reached yesterday.
Freeman Guards Inc. was a family-run business started in 1972 by retired police officer Jerry Kele Freeman. His widow, Helen, was its president, while her son-in-law Patrick Canonigo was its vice president, her daughter Roxanne Canonigo was its treasurer and an Edwina Freeman, whose relationship could not be immediately determined, served as a director.
Freeman estimates assets and liabilities at between $1 million and $10 million and lists between 200 and 999 creditors, according to the bankruptcy filing. The largest secured creditors are Atlas Insurance at $390,000 and California-based lender Graystone Capital at $360,000.
OUT OF BUSINESSFreeman Guards Inc. filed for Chapter 7 liquidation yesterday:
» Founded: 1972
» Founder: Jerry Kele Freeman
» Employees: About 200
» Offices: Oahu, Honolulu Airport, Hilo, Kona, Maui
» Key clients: University of Hawaii, airlines
» Services: Guard services, loss prevention, mobile patrol, consulting and investigative
» Top unsecured creditor: American Express, $55,000
» Top secured creditor: Atlas Insurance, $390,000
Its largest unsecured creditor is American Express, which is owed more than $55,000 from Freeman's total credit card debt of nearly $65,000.
Other unsecured creditors include Pacific Guardian Life, owed $21,436 for temporary disability insurance; Kaiser Permanente and HMAA for health insurance totaling nearly $29,000; and HEMIC, which is owed nearly $8,000 for workers' compensation insurance. Also listed among Freeman's unsecured creditors is Straight Ahead Alcohol & Drug Awareness Program, owed an undisclosed amount.
Secured creditors and administrative expenses -- such as payments to attorneys, the trustee, accountants and personnel performing the bankruptcy casework -- will be the first to receive any payments, but because employees have gone unpaid, "that puts them into priority land and makes them the King Kong of unsecured creditors," giving them priority over other unsecured claims, Farmer said.
"You pass two paychecks and you're in tight shoes," he said.
Farmer is advising former Freeman employees to shift into survival mode by filing for unemployment benefits and looking for work with security companies that might be hiring because of the former Freeman business that comes their way. At least one large company is working to place Freeman employees in jobs, according to a source close to the case who spoke on condition of anonymity.
The company had some state contracts, such as at the University of Hawaii at Manoa, where it staffed parking security and handled other types of security assignments, said Wayne Ogino, chief of security for UH-Manoa. Freeman would provide 15 to 16 staff members per day during the week, fewer on weekends. "Since we were notified, we made alternate arrangements with other guard companies to fill in temporarily," Ogino said. Security for campus dormitories is not affected, as that is handled by campus security, he said.
Freeman Guards had some airline contracts and rented a small, 126-square-foot office under Gate 29 at Honolulu Airport. However, it had no contracts with the state Airports, Harbors or Highways divisions of the state Department of Transportation, according to spokes-woman Tammy Mori.