Aloha Pacific Cruises Files for Chapter 11

Aloha Pacific Cruises, a tour company based in Virginia that operates the liner SS Monterey between California and Hawaii, will file for protection from its creditors after efforts to keep the company afloat failed.

Aloha’s chief operating officer, John Broughan, said the company would seek protection under Chapter 11 of the U.S. Bankruptcy Code because of “severe cash shortages and because efforts to obtain additional financing were unsuccessful.”

Aloha plans to continue operation of the Monterey, which is its only ship and which entered the luxury liner business last August after nearly 37 years of service as a freighter, a $40-million face-lift and four years of delay and federal intervention.

The ship makes weekly cruises between ports in California and Hawaii. The 563-foot, 600-passenger vessel has sailed about 20 times with an average of 75% occupancy, according to the company.

An Aloha spokesman called the decision to reorganize “strategic” and “a temporary measure.” But the action continues a string of legal, political and financial setbacks that have plagued the Monterey for more than a decade.

Aloha Pacific, a limited partnership and tax shelter set up by Washington lawyer James L. Kurtz, bought the Monterey for $32 million in 1987 from the International Organization of Masters, Mates & Pilots, a Baltimore-based union of ships’ officers that had purchased the ship in 1980 in an effort to create jobs for its members.