David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

CV05-00030 DAE KSC

U.S. District Court For the District of Hawaii

Judges: David A. Ezra; Kevin S. Chang



President and CEO of Aloha Airlines.

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April 22, 2005

Law firm quits from Aloha Air bankruptcy

The Gelber firm was at the center of a dispute
between the carrier and its lenders

By Dave Segal, Starbulletin

Aloha Airlines' lead legal firm, which has represented the carrier during its four-month bankruptcy, is withdrawing from the case.

The Honolulu firm Gelber, Gelber, Ingersoll & Klevansky didn't offer any specific reasons for its decision. However, earlier this month, Aloha went to court after having a dispute with the company's new lenders over whether the Gelber firm's Aloha Airlines trust account was vulnerable if the lenders were to collect on a lien.

The Gelber firm's Aloha trust account contains the firm's pre-bankruptcy retainer, which has a balance of $250,000, plus additional money for legal services that were deposited in keeping with court procedures.

Don Gelber, partner in the Gelber law firm, declined to comment on reasons for withdrawing as counsel. However, the firm said in its motion that it was an opportune time because the withdrawal would eliminate any question concerning a conflict of interest between the firm and the airline, many of the company's legal problems have already been addressed and the firm's withdrawal probably would reduce Aloha's legal expenses.

People familiar with the case said fee issues and a difference of opinion over the bankruptcy process prompted the Gelber firm's decision to want out.

The move to pull out comes as Aloha is entering a new chapter in its bankruptcy.

Earlier this week, the company's mechanics and inspectors union became the last of the airline's five unions to ratify a labor contract that has concessions. The new pact will allow the outsourcing of heavy-machinery work, which will result in 79 positions being lost.

In addition, Aloha sent letters to its flight attendants last week requesting volunteers to take three-month unpaid vacations.

Al Pattison, the company's senior vice president of human resources, said about 40 jobs will be affected and that the airline will be forced to lay off flight attendants if it doesn't get enough volunteers. The airline won't need as many flight attendants because a new contract provision reduces the number of attendants on trans-Pacific flights from four to three.

Aloha already has laid off 24 pilots since the start of the year.

David Banmiller, president and chief executive of Aloha, said the company has made "monumental progress" during its reorganization. He cited new aircraft leases, paying off more than $20 million in federally guaranteed loans, paying off another $20 million in commercial loans, obtaining a new $65 million loan and securing the new labor contracts.

"We are now at a new juncture that places great emphasis on the capitalization of the company and its emergence from bankruptcy," Banmiller said.

Berger Singerman, a Miami-based law firm that has been acting as the airline's special transaction counsel, will replace the Gelber firm as the lead attorneys. Hawaii lawyer David Farmer, a former president of the bankruptcy law section of the Hawaii State Bar Association, will join Berger Singerman's legal team as the local co-counsel.

Paul Singerman said the Gelber firm has done "a great job" but declined to comment on why the firm decided to pull out.

"A development of this kind is not a particularly common occurrence in a Chapter 11 case," Singerman said.


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David Banmiller is expected to testify regarding his business, professional, political and personal relationships with David C. Farmer, Judge Alan Kay, Judge David Ezra, Daniel Case, Steve Case, Stephanie Case, The Nature Conservancy, Judge Barry Kurren, Faye Kurren, John Marshall, Aloha Airlines, Colbert Matsumoto, Earl Anzai, Lyn Anzai, Linda Lingle, Bob Awana, Henry Paulson, Goldman Sachs, James Nicholson, Carol Muranaka, Larry Price, Howard Luke, GECC, John Waihee, Steven Guttman, Mary Lou Woo, James Aiona, Judge Samuel King, Randall Roth, Jerrold Gubin, Cutter Ford, Governor Linda Lingle, June Jones, Larry Price, Joshua Gotbaum, Ben Cayetano, George Ariyoshi, Walter Dods, First Hawaiian Bank, Cobert Kalama, Dee Jay Mailer, Evan Dobelle, University of Hawaii, Judge Robert Faris, Judge Lloyd King, James Wriston, Judge Ronald Moon, Rosemary Fazio, Lawrence Johnson, Kirk Caldwell, Donna Tanoue, Bank of Hawaii, Harold Johnston, Grant Johnston, Frank Tokioka, Island Insurance Holdings, Michael Tanoue, Richard Ing, Louise Ing, Paul Alston, Judith Neustadter Fuqua, and other entities to be named upon discovery.

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