A news story in The Advertiser said that, during bankruptcy proceedings, the airline’s unsecured creditors committee had been looking into the use of airline employee pension money to acquire Aloha stock issued several years ago by the airline. Proceeds from the stock sale went to the airline, which the committee said was used to pay bank loans. Meanwhile, the pension fund was left with Aloha stock, which became worthless during the bankruptcy, according to the news report.
The EBSA investigation centers on the 2,400-member machinists union’s defined-benefit plan.
The agency earlier this month subpoenaed First Hawaiian Bank, asking for loan records, investment agreements and other financial records relating to Aloha’s management of the machinists union pension. The department said in a copy of a subpoena obtained by The Advertiser that it is requesting similar records from the Bank of Hawaii, American Savings Bank and Central Pacific Bank.
The airline emerged from bankruptcy just last week. The airline faced much opposition, that delayed its exit from bankruptcy, from union members and the Pension Benefit Guaranty Corporation (PBGC) on terminating its pension plans as part of it reorganization (See Aloha Airlines and Unions Butt Heads). A last minute deal with the PBGC earlier this month finally resulted in its reorganization being approved (See Aloha Bankruptcy Exit Plan Approved for Take-off).