Developer of Kauai condos files for bankruptcy over ‘predatory lending agreement’
HONOLULU (HawaiiNewsNow) – A divisive development of 279 luxury condos under construction on Kauai’s south shore is now in financial trouble.
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After pre-selling about $100 million worth of units, developer Meridian Pacific filed for Chapter 11 bankruptcy over its Kauanoe o Koloa project, days before a scheduled hearing for a lawsuit against it.
An attorney for the company blamed a “predatory lending agreement” for the filing.
“They’re hoping that the trustee in bankruptcy can sell the parcel, which is partly developed, but not enough for anybody to live on, and it’s a mess,” Bridget Hammerquist, president of non-profit organization Friends of Mahaulepu, said.
The group filed the lawsuit, claiming the project’s drainage plan would send storm water runoff onto neighboring properties.
Kauai County is a defendant in the litigation for permitting the plan.
“It was too big a thing for the south shore, and it was really going to threaten our beaches with the runoff,” Hammerquist added.
Friends of Mahaulepu was prepared to make their case to the Hawaii Supreme Court on Thursday, but now, they are on standby.
“Our lawyers are trying to figure out right now whether there will be oral argument because we don’t know the impact of the bankruptcy filing,” Hammerquist said.
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Opponents also raised alarm four years ago when crews blasted through dense rock on the 25-acre parcel next to the Kiahuna Golf Course.
“That (the work) really probably injured a lot of the native species, which are indigenous and unique to Koloa. They’re nowhere else in the world,” Hammerquist shared.
At the time, Meridian told HNN a team of archaeologists tested the site beforehand, and that the State Historic Preservation Division concluded no historic properties were impacted.
“You know they did a lot of damage,” area resident Llewelyn Kaohelaulii said.
Kaohelaulii is the caretaker of a nearby site sacred to Native Hawaiians, Kaneiolouma Heiau, and argues the development is disruptive to the grounds.
“It’s taking everything of us,” Kaohelaulii said. “It’s been happening in Poipu, so much development coming down.”
HNN asked Meridian’s attorney how the bankruptcy would affect the project, and did not get a specific response, but we received the following statement:
“The Chapter 11 filing was a difficult, but necessary, step to address financial obligations arising from a predatory lending arrangement. Chapter 11 provides the orderly framework needed to stabilize the project, protect the interests of all interest holders, and resolve the disputes in the proper forum. Our foremost concern is the impact on the Kauai contractors and local businesses who have contributed to this project. We are committed to working through the Chapter 11 process to preserve the project, benefit the community, and treat creditors and buyers in escrow fairly.”
The county said it cannot comment on pending litigation.
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