Judge dismisses Chapter 11 filing

Royal Guard Security seeks a new course of action
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Monday, December 1, 2003

HONOLULU - A security guard firm that filed for Chapter 11 bankruptcy protection earlier this year and tried to initiate a sale of the company as part of those proceedings has had its case dismissed, leaving the company to sort out how it plans to pay more than $1.5 million owed to the Internal Revenue Service, lawyers and other creditors.

Royal Guard Security, a company that employs 193 workers, filed Chapter 11 in May. The company’s owner, Clarence Scanlan, claimed the company could not afford workers compensation insurance and must either sell or terminate the company, according to documents filed in the U.S. Bankruptcy Court District of Hawaii.

Court documents show that Royal Guard Security owes $990,000 to the Internal Revenue Service. According to records submitted by the IRS, the agency said the guard company failed to file its federal employment tax returns in a timely manner and did not make its federal tax deposits on time.

Other creditors listed in the court documents included Verizon, Nextel, it’s payroll service company Automatic Data Processing, Federal Express, and Home Depot.

But despite claiming a hardship in affording to pay workers compensation insurance, a bankruptcy court judge in November dismissed the case and the proposal to sell Royal Guard Security to Alii Security System.

Officials at Royal Guard Security did not return phone calls.