Bankrupt Hawaii hauler costs Oahu millions

Dive Brief:

  • Commercial waste hauler Rolloffs Hawaii was sold in a bankruptcy auction to West Oahu Aggregate Co. for $5 million last week, though the city of Oahu may not recoup money that it is owed by the company, as reported by Hawaii News Now.
  • Rolloffs Hawaii owes Oahu nearly $3 million in unpaid tip fees at landfills and an incinerator owned by the city. At its height the company was paying the city about $825,000 per month in fees.
  • Per the terms of the auction the company's secured lender will be paid before Oahu and some officials are skeptical that the city will ever be reimbursed in full. The company has agreed to pay the city $125,000 per week for all future deliveries to its facilities.

Dive Insight:

Rolloffs Hawaii filed for bankruptcy late last year with around $10 million in debt and only attracted one bidder in the recent auction. While a rebranding is expected, the company's new owner has said that service will not be affected for existing customers. These accounts include multi-unit residential complexes, commercial clients and government buildings.

Yet the city's budget will take a hit — at least in the short term — from this outstanding debt. Some have pointed to a local law that would allow the city to charge penalties for late payments as one way this could have been mitigated and advised that it be used in the future. A recent report from In the Public Interest, a nonprofit policy center, outlined recommendations for municipalities retaining more control in contract language to avoid costly or confusing situations such as this one.

While this report elicited mixed reactions from some industry associations, none disagreed with its calls for more transparency in the contracting process to the benefit of both parties. As seen recently in Massachusetts, where a bankrupt hauler abruptly stopped servicing multiple communities, or in the case of some recyclers that have left behind large amounts of material after going bankrupt, situations can occur that leave taxpayers on the hook for the actions of private waste companies.

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Filed Under: Corporate News Regulation
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