By Andrew Gomes; Star Advertiser; January 5, 2017
The red garbage collection trucks of Rolloffs Hawaii will keep rolling for its roughly 2,000 Oahu customers, but under new ownership after a U.S. Bankruptcy Court judge approved a sale of the struggling company Wednesday.
West Oahu Aggregate Co. ended up being the only bidder for Rolloffs at the courthouse auction in Honolulu, where competitive bidding had been anticipated.
The biggest company in the commercial trash hauling business on Oahu, Honolulu Disposal Service, previously indicated it planned to bid $5.2 million but did not.
West Oahu Aggregate, a 24-year-old construction debris hauling and recycling firm that expanded into private trash collection about five years ago, will pay $5 million.
Joaquin Silva, company vice president, said Rolloffs presented an opportune way to further expand.
“It’s a big expansion,” he said.
The takeover is expected to happen toward the end of the month and is predicted to be seamless for customers that include housing complexes, Ala Moana Center, Outrigger Hotels, Foodland Super Market, Walmart, Hawaiian Dredging Construction Co. and McDonald’s.
Jerrold Guben, a local bankruptcy attorney representing Rolloffs, said customers have been concerned about whether their trash would be picked up since Rolloffs filed for Chapter 11 bankruptcy Dec. 9.
“They would probably not even notice aside from the color of the truck that (business) is being transferred from Rolloffs to West Oahu Aggregate,” he said.
Silva said his company intends to retain all 83 Rolloffs employees, though how the combined companies will be rebranded has not yet been decided.
Another thing that hasn’t been determined yet is how much Rolloffs debt will be repaid.
Rolloffs filed for bankruptcy with about $10 million of debt. About $6.3 million of that is owed to American Savings Bank, which holds Rolloffs assets as collateral and has priority to be repaid before other creditors.
The so-called unsecured creditors claim they are owed about $3.5 million, including a $2.9 million claim held by the city for receiving trash at its landfill and power generation plant.
Bankruptcy Judge Robert Faris acknowledged that American Savings is owed more than it stands to receive from the sale, but expressed concern about unsecured creditors not getting anything.
The bank will receive $5 million from the sale, and agreed to share with other creditors another pot of money left after pending expenses to operate Rolloffs are subtracted from $2 million the company has yet to collect from customers.
Guben estimated there could be $450,000 left in this pot, and the bank agreed to give unsecured creditors up to this amount plus two-thirds of anything over $450,000.
U.S. Trustee Curtis Ching, a federal official who monitors bankruptcy cases for integrity, warned that expenses including attorney and accounting fees, employee benefits and general excise taxes could leave just $100,000 for unsecured creditors.
Faris said he didn’t see how the arrangement could be better.
“It’s not good for unsecured creditors, but that’s because the situation is terrible for unsecured creditors,” he said. “The value of the business just is not there compared to what the secured debt is. I think this is probably the best that can be done for the unsecured creditors.”