Liberty House reorganization, post-bankrupcy plan in writing

HONOLULU — JMB Realty and the other owners of Liberty House have filed a reorganization plan they said will allow the business to emerge from bankruptcy without waiting for a federal tax audit to be completed.

The plan, submitted Aug. 10 to U.S. Bankruptcy Court in the Hawai’i district, calls for paying creditor claims in full through a combination of cash, notes and stock issued when Liberty House comes out of bankruptcy. The store owners remain majority stockholder.

The plan puts a reorganization value of $280 million on LibertyHouse; assets would be valued at $330 million if liquidated.

In addition, the plan, which is subject to court and creditors’ approval, would include affiliates of Liberty House’s owners giving collateral to the Internal Revenue Service in exchange for IRS releasing any claims against the business.

Thus, Liberty House could emerge from bankruptcy before its IRS tax audit is finished.

The owners would benefit from liquidation, but the reorganization proposal “demonstrates our continue support of Liberty House as an ongoing business,” said Steve Plonaker, executive vice president of JMB.

There are no plans for closing stores, including the Kaua’i store at Kukui Grove Center.

However, the Waikiki store would be transferred to Liberty House’s lenders to partially satisfy their claims.

The store presumably would be redeveloped by the lenders, Liberty House officials said.

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