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Bankruptcy judge approves appointment of Naniloa Hotel trustee

Published On: May 10 2013 08:01:39 PM HST

A dramatic change could be ahead for Hilo's troubled Naniloa Hotel. A bankruptcy judge has moved to put a trustee in charge.

HONOLULU -

Hilo businessman Ken Fujiyama appeared before the state land board to ask for a continued break on the conditions of his lease.

"We have been blasted in the public by a lot of people for not doing things," said Ken Fujiyama.

Fujiyama made a last ditch appeal to the board member who were poised to come down on the Naniloa hotel operator.

He was hoping to avoid having a performance bond tied to his land lease raised back to a million dollars--after getting a break of half that.

Fujiyama also tried to explain a list of building and safety violations that county inspectors discovered last month.

"We didn’t know we were in violation as far as the safety code, until the state inspector told us" Fujiyama said,

 He maintained the conditions in two of the three towers were because of  ongoing renovations.

 Fujiyama argued he also invested twice as much as the state required.

"They required us to put in $5 million, we put in we put in more than that. The state is not going to lose anything, one way or another you are going to get your money. But to put an extra burden of 500,000 is the wrong play," Fujiyama said.

 But the board also heard of new developments in bankruptcy court; the unexpected withdrawal of Fujiyama's attorney and the motion by the bank to have a trustee take over operations.

"A trustee will be appointed, Just at least for the interim, until one is formally approved,  the debtor, Ken Fujiyama will continue to operate the hotel  until that time," said State Land Administrator Russell Tsuji.

Tsuji said Fujiyama defaulted on his rent and filed for bankruptcy to forestall forclosure.

The Hilo businessman said the hotel has been recently operating in the black and  he had  hoped to assume the lease as part of the reorganization plan. Despite his appeals, the board voted to up the performance bond.

Fujiyama says right now the next bankruptcy court date is June 10th.

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