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Is trustee hitching free ride?
The successful effort by Hawaiian Airlines bankruptcy trustee Josh Gotbaum last week to become an officer and employee has bankruptcy scholars perplexed, and Gotbaum's harshest critics accusing him of trying to snap up perks for himself and his family.
Simultaneously holding the positions of bankruptcy trustee and corporate officer would seem to blur the lines of responsibility for Gotbaum, according to several specialists in bankruptcy law.
"The ability of a trustee to also become an officer of a company in bankruptcy, at least on the surface, would appear to compromise his or her ability to be impartial," Talley said.
Gotbaum's attorney said that the request, while unusual, saves Hawaiian money and places strict limits on Gotbaum.
Gotbaum, appointed in July to steer Hawai'i's largest airline out of bankruptcy, argued last week that he also needed to become a company officer and employee. He told the bankruptcy court he needed cockpit and airport security access and free air travel and health benefits to cut down on costs.
Some in the bankruptcy court hearing suggested Gotbaum could easily get such access and perks without becoming an officer or employee, leading to questions about his motives.
If nothing else, last week's ruling by U.S. Bankruptcy Judge Robert Faris underscores the unusual twists and turns since Hawaiian filed for Chapter 11 bankruptcy protection in March, saw its CEO removed from power and had its first bankruptcy trustee resign after three weeks on the job.
"While (Gotbaum's request to become an officer) was an unusual request and some of these issues are unusual, this is also an unusual case," said Steven Katzman, the U.S. trustee who appointed Gotbaum.
In court papers, Katzman's office said it was concerned that making Gotbaum an employee and officer would mean he was no longer a "disinterested" party to the bankruptcy.
But the trustee's office said it would not oppose the request  as long as it helps Gotbaum administer his duties.
Next month, the court is scheduled to take up the issue of his salary. Gotbaum has proposed that he be paid $500 an hour, not to exceed 140 hours per month, and that he be reimbursed for "the reasonable cost" of renting a single-family home and automobile. A hearing is scheduled for Jan. 23.
Attorney Bruce Bennett, who represented Gotbaum in court last week, said his client would not stay with Hawaiian after it emerges from bankruptcy protection.
Nor will Gotbaum have a specific corporate office title, Bennett said.
Capt. Bob Konop, a Hawaiian Airlines 767 pilot who has challenged Gotbaum several times in bankruptcy court, believes that Gotbaum's primary motive lies buried in his request to become a company officer.
"Gotbaum's request failed to state his true intent  that is, to obtain additional perquisites for himself and for his family members," Konop said in a court motion.
Specifically, Konop believes that Gotbaum wanted to become a corporate officer to get free, unlimited first-class travel for himself, his wife and three young children  especially in time for the holiday season.
Airlines assign about 50 rankings for free airline travel, with the highest priority given to pilots and crew who need to fly to another destination to staff a flight.
Hawaiian's next-highest category  PS3F  goes to corporate officers and their families, who can bump everyone else and ride first-class for free, Konop said.
"They basically get a credit card that lets them get on any airplane ahead of almost everybody else," Konop said.
In fact, Bennett said, Gotbaum has been paying for all his Hawaiian flights and getting reimbursed for the business trips.
"We thought that was silly," he said. Gotbaum never intended to arrange free travel for his family, Bennett said.
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
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