Island Air’s former employees have been dealt another blow.

The company’s 423 workers, already without their final November paycheck and health insurance, now are being shut out from accessing their 401(k) retirement funds — some of which have been deposited in the wrong account.

About $35,770 in 401(k) contributions that were taken out of employees’ final October wages mistakenly ended up in an Island Air tax account rather than the employees’ individual accounts at Mass Mutual Financial Group, according to a bankruptcy filing made Wednesday by the Chapter 7 trustee. The filing also said $3,133 of the misplaced 401(k) funds were loan payments made by employees who borrowed against their 401(k) accounts. Those loans are now delinquent because Island Air failed to correctly process the payments to Mass Mutual.

And not only are those funds now in limbo, but previous contributions that employees made toward their retirement are now inaccessible, the filing said.

Those disclosures were part of a motion filed by trustee Elizabeth Kane, who is asking the court to dismiss the Chapter 7 case because there is no money available for her to carry out her responsibilities, pay administrative expenses or to pay unsecured creditors.

A preliminary hearing on the motion is scheduled for 10:30 a.m. today. If the case is ultimately dismissed, then the employees — possibly with union assistance — and the creditors will be on their own outside of bankruptcy to try to collect what they are owed.

Kane indicated in the filing that she is exploring what can be done to enable the former airline employees to gain access to the $35,770 that was deposited in the wrong account. She also said she likely will require the assistance of special federal retirement counsel to assist in the termination of the 401(k) plan.

Since all of Island Air’s employees have been terminated, there is no one remaining to oversee the company’s self-administered 401(k) plan and respond to former employees’ request to access the funds for hardship withdrawals, loans and to transfer the amount to either an IRA or another company’s 401(k) plan.

PaCap Aviation Finance and Carbonview Ltd., the secured creditors and owners of Island Air, say they have $200,000 in an account that is available to handle 401(k) matters and W-2 processing. PaCap Aviation is headed by Honolulu venture capitalist Jeffrey Au and Carbonview is a subsidiary of Ohana Airline Holdings, which is owned by billionaire Larry Ellison, the previous sole owner of Island Air who sold a two-thirds stake to Au’s investment group.

Despite the owners’ offer, the trustee said these funds are only a small fraction of the expenses necessary to administer the case and the trustee cannot administer the case with support only for those matters that a secured creditor approves.

The motion said that prior to the conversion of the case on Nov. 13 from a Chapter 11 reorganization that “it appears no planning was done to assist the former employees … in obtaining continued health insurance coverage through COBRA, or even allowing them access to their 401(k) plans.

“With no money in the Chapter 7 estate and no assistance from the secured creditors or owners, the trustee is unable to continue to administer the case,” the motion said.