The biggest Filipino community center outside the Philippines — a stately facility in Waipahu — is in financial straits after clashing with a local catering and events management company that was supposed to benefit the center.
Filipino Community Center Inc., a nonprofit also known as FilCom Center, filed for bankruptcy Friday in an effort to maintain operations and chip away at a major debt tied to the dispute.
The organization is proposing to repay its foe, Creations in Catering, over time and is also asking a U.S. Bankruptcy Court judge in Honolulu to cancel a contract with the company that exclusively handles catering and events at the center.
FilCom blames Creations in Catering for its financial problems, though a retired state judge recently ruled in an arbitration case that FilCom breached its agreement with the catering firm owned by Michael Rabe.
FilCom’s net income/loss:
YEAR NET AMOUNT
2015 $285,864 loss
2014 $185,206 loss
2013 $280,017 income
Rabe was named entrepreneur of the year in 2006 by the Filipino Chamber of Commerce of Hawaii. He did not return a call seeking comment Monday.
FilCom’s executive director, Donnie Juan, said center operations won’t be disrupted.
“The bankruptcy will not affect the community center’s core mission of providing social and educational services to the community,” he said.
The three-story center was built for $14 million in 2002 on the former site of Oahu Sugar Mill in the style of a Spanish villa.
Creating the center dates back to an effort by the local Filipino Chamber of Commerce that began in 1991 and attracted donations from individuals, companies and government, including 2 acres of land from former sugar plantation owner Amfac/JMB, $4.1 million in government grants and $3 million from The Harry and Jeanette Weinberg Foundation.
L&L Drive-Inn co-founder Eddie Flores Jr., who helped lead the FilCom project, explained in 2002 that 80 percent of the center’s space was designed to generate income to help the center support itself.
Birthdays, weddings, meetings and other events are regularly held at the center, which is available to the broader community and wasn’t built solely as a cultural center for Filipinos, who make up 26 percent of Hawaii’s population when including people who are at least part-Filipino.
However, financial self-support has been a challenge. FilCom reported receiving $1.3 million in state funds between 2013 and 2015 for things including a photovoltaic system, new computer equipment, a retractable courtyard roof and an air-conditioning system retrofit.
In its effort to operate more like a business, FilCom signed a seven-year contract for Creations in Catering to exclusively use the center’s kitchen and manage all special events at the complex, which includes a ballroom seating 380 people, a courtyard with room for 100 seats, meeting rooms and office space leased to small businesses.
At the time, Juan said the contract was envisioned to bolster event revenue for the center, according to FilCom’s 2015 annual report.
Instead, revenue from events declined, and the nonprofit’s net income swung from a positive $280,017 in 2013 to a $185,206 loss in 2014 and then a $285,864 loss in 2015.
The relationship between the center and Creations in Catering started to take a “negative turn” around the start of 2016 when FilCom believed its contractor wasn’t upholding terms of the agreement that called for Rabe’s company to invest $70,000 in facilities and help establish a catering industry training program, according to court documents.
FilCom also alleged that Rabe’s company, which includes affiliates Emcube Inc. and Epic Creations LLC, let participants of a mixed martial arts event use one room for free and improperly held its 2015 Christmas party in the ballroom without paying, according to court filings that also said FilCom notified Creations in Catering in mid-2016 that it was terminating the contract.
Creations in Catering sought binding arbitration and alleged that FilCom improperly removed a meeting room from rentable event space, didn’t maintain the property and breached a duty to provide the company with office and storage space.
Specifically, a counterclaim said FilCom didn’t properly clean or replace “worn, torn, rippled, stained and malodorous carpeting” and that the center didn’t properly clean a fountain in the courtyard or fix other broken items including doors, air conditioning, lights and courtyard tiles.
Retired Hawaii Supreme Court Associate Justice James Duffy Jr. decided the arbitration case in favor of Creations in Catering and awarded the company about $275,000 that included $43,150 in rent overcharges and $193,892 in attorney’s fees and costs while also keeping the contract in place.
Since the ruling, Creations in Catering has withheld about $20,000 a month from FilCom to collect on the arbitration award, but the center can’t sustain that without defaulting on other bills, so Chapter 11 bankruptcy was sought to reorganize debt payments. FilCom also is seeking to break its contract with Creations in Catering, which can be done in bankruptcy with the court’s approval.