Opinion ID: 1034091
Heading Depth: 2
Heading Rank: 1

Heading: Mahalo USA and Mahalo Canada

Text: Mahalo Energy (USA), Inc. is a Delaware corporation which, before its bankruptcy, operated exclusively in Oklahoma. Mahalo USA was in the business of exploring for and producing natural gas. Mahalo USA had a field office, employees, equipment, and real estate interests in Oklahoma. Mahalo USA is wholly owned by Mahalo Energy Ltd., a Canadian corporation we will refer to as “Mahalo Canada.” The basic thrust of this lawsuit is that Mahalo Canada’s directors (some of whom were also directors or officers of Mahalo USA) conspired to maximize their own profits by shifting unsustainable debt to Mahalo USA. This course of action began in 2006, when -3- Mahalo Canada acquired another company and assumed its debt. Mahalo Canada then transferred all of that debt to Mahalo USA while keeping the equity. Mahalo Canada also encumbered Mahalo USA’s assets as partial security for Mahalo Canada’s $50 million revolving line of credit. Finally, Mahalo Canada sold some of its Canadian assets to an investment vehicle in which most Mahalo Canada directors were invested, leaving Mahalo USA’s encumbered assets as the primary security for Mahalo Canada’s credit line.