Dispute over hotel wares muddles prospective sale

A delayed sale of the Naniloa Volcanoes Hotel in U.S. Bankruptcy Court is expected to be completed next week, though the buyer has alleged that hotel equipment and inventory is missing from the oceanfront Hilo property.

The buyer, real estate developer Ed Bushor, who is partnering with marine artist Wyland to revitalize the troubled hotel, has proposed extending a now-past purchase deadline to Wednesday. Bushor, however, has asked that $2 million of the $5.2 million purchase price be frozen in escrow until an accounting of hotel property can be done.

Bushor claimed in court documents that all towels and linens are missing and that every piece of equipment — including silverware, glasses, pots, pans and ovens — is missing from the hotel kitchen.

David Farmer, a local attorney appointed by the court to oversee operations of the hotel while in bankruptcy, disputed Bushor’s claims.

"We are operating," he said. "Nobody is going sheetless or towel-less."

Farmer said some confusion stems from aborted hotel remodeling work by the owner, Hawaii Outdoor Tours Inc., which is headed by Ken Fujiyama, and the owner’s storage of personal property and items from other Fujiyama-owned businesses on Naniloa grounds.

"The allegations about the (missing) property have zero truth to them," said Farmer, who has worked with Fujiyama to keep the Naniloa open while in bankruptcy.

Fujiyama’s company owns the Volcano House hotel and wedding and restaurant operation Nani Mau Gardens.

Fujiyama bought the Naniloa and its nine-hole golf course on state land at a state auction for the land lease in 2006. Amid the economic downturn, he defaulted on a $10 million loan after starting work to renovate the 333-room hotel.

Bushor indicated in the court filings that Fujiyama claimed that he or his family owns certain items at the Naniloa, including two pianos, certain art, koa banquet chairs, gas-powered golf carts, laundry equipment, a truck and a Cadillac.

Bushor acknowledged in the court filings that he lacks sufficient information to determine whether these assets are included in the sale, and added that Fujiyama has stated that everything belonging to the bankruptcy estate is on hotel property.

Farmer backed Fujiyama’s claims and said there is evidence to support ownership of the items. He said he is hopeful that Bushor and Fujiyama will work out any disagreements.

An attorney representing Bushor in the bankruptcy declined to comment on the property issue Thursday.

Bushor could not be reached for comment.

Farmer opposes the request to withhold $2 million of the purchase payment but still believes the situation will be ironed out so the sale can close next week.

An original closing deadline for the sale was Monday. Bushor cited the property issue along with some escrow account glitches and incomplete documents for the delay. He also said access to the hotel was provided only five days prior to the closing deadline, which inhibited efforts to account for property and hire employees.