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Creditors sue past executives from HawTel for $2.5 million

A trust representing unsecured creditors in the Hawaiian Telcom bankruptcy case is suing three former top executives of the company to recover about $2.5 million in severance and other payments paid to the officers before the company filed for bankruptcy in late 2008.

The suits seeks $2.1 million from Michael Ruley, former chief executive officer; $201,955 from former chief information officer Loren Tobey; and $161,885 from former chief financial officer Michael Brown.

The payments include severance, moving and relocation expenses, unused vacation days and consulting fees.

The suits alleges that the executives were not entitled to most of the payments because they occurred to close to the time of the bankruptcy filing. The suit against Ruley also asked that he return an additional $142,980 in consulting fees that he received "without providing any value to the debtors."

The suit also noted that the payments were made to Ruley at a time the company was insolvent.

Neither Ruley nor Tobey could be reached for comment. Brown’s whereabouts were unknown.

Hawaiian Telcom filed for Chapter 11 bankruptcy protection on Dec. 1, 2008. It emerged from bankruptcy on Oct. 28.

Christopher Muzzi, an attorney representing the plaintiffs, said claims against the executives and a handful of other vendors who received payments from Hawaiian Telcom in the months before it filed for bankruptcy were transferred to a "litigation trust" last fall.

Ruley was named Hawaiian Telcom’s CEO in October 2004 and headed the company’s transition after Washington, D.C.-based Carlyle Group completed its acquisition of the company from Verizon Communications Inc. for $1.6 billion in May 2005.

Ruley, who abruptly resigned from Hawaiian Telcom in February 2008, is now CEO of Airband Communications Inc., a Dallas-based company that bills itself as "the largest fixed wireless provider serving businesses in the United States."

Tobey, who worked at Hawaiian Telcom from Aug. 7, 2006, to Sept. 12, 2008, is now chief information officer at AEES Inc., a Farmington Hills, Mich.-based company that designs electronic distribution systems for vehicles.

 

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