The CEO of Kona Village Resort said a lender’s refusal to release insurance money has stalled work on the property, prompting contractors to walk off the job and the company to lay off the remainder of its workforce. Kona Village has been closed since the March 2011 tsunami.
"Our lenders (Deutsche Bank and Kennedy Wilson) have refused to cooperate and are unwilling to fund additional payments to cover the work going out there. In the absence of having a solution for these cash requirements, we had to give notice to our remaining staff last Tuesday," said Patrick Fitzgerald, chief executive officer of the resort.
Kennedy Wilson officials could not be reached late Monday.
About 22 Kona Village employees, who mostly worked in accounting and security, have been notified that they will be laid off Sept. 17. About 200 workers were laid off in April 2011 after water and wind swept through the 45-year-old resort. Fitzgerald said the company had kept some workers on payroll with the expectation that they would be needed to assist with the resort’s reopening.
"We are meeting with the workers individually. We are looking for opportunities for them," he said.
Fitzgerald said that he was disappointed that the lenders, which since last year had released several million dollars to pay for design, engineering and infrastructure, did not fund the resort’s August payment request.
"There are a few million dollars’ worth of claims from contractors and design consultants outstanding," Fitzgerald said. "There is plenty of insurance money in our trust account to pay them if the lender would release the funds."
While many in the community are speculating that this latest development means that Kona Village Resort will close for good, Fitzgerald said its future still is uncertain.
"I can’t say what will happen months from now," he said, "but at this point you shouldn’t say that it’s closing permanently."
