Ex-Island Air employees have $8 million in 401(k)s

The 401(k) accounts that former Island Air employees have been unable to access contain more than $8 million, according to a person close to the situation who requested his name not be used.

Simon Klevansky, attorney for Chapter 7 trustee Elizabeth Kane, said Monday in federal Bankruptcy Court that the benefits firm the trustee hired to sort out the 401(k) situation is making progress after the retirement funds of roughly 400 employees were put in limbo following Island Air’s shutdown on Nov. 10.

Benefits attorney Ron Sakamoto said in a phone interview after the court hearing that the administer of the fund, MassMutual, will send out letters asking the participants to elect what they want do with their funds.

Klevansky disclosed in court Monday that the trustee had reached an agreement Friday with Island Air’s two secured creditors — who also are the former owners — to split net proceeds 50-50 from the sale of “other assets,” which include ground-service equipment and furniture. Without the agreement with Honolulu venture capitalist Jeffrey Au and billionaire Larry Ellison, Island Air’s estate would not have received anything from the sale of those assets, Klevansky said.

A subsidiary of Hawaiian Airlines’ parent has offered to buy those assets for $100,000. A hearing on that sale was continued to Feb. 27.

Klevansky also asked the court’s permission to allow unions to be able to file claims on behalf of their members.