Hilo Hattie expects to emerge from bankruptcy by year’s end and will continue operations online and at three stores. 

The long-time local retailer said its stores on Kauai, Maui and at Ala Moana Center on Oahu will continue, though the future of a store in Iwilei remains unclear. The company is also rebuilding its online website to push Internet sales. 

"We’re confident Hilo Hattie will be emerging as a stronger company and one that is much better able to compete in today’s marketplace," said Donald Kang, owner and CEO of Hilo Hattie, in a press release. "I’m very proud of the executive team’s hard work in putting together a plan that shows us returning to profitability in 2016, and of all the employees who have maintained the utmost in professionalism and aloha throughout this difficult time." 

The company said it will be a more competitive player in the retail market after the $5.1 million sale of its Nimitz location. It also has drastically reduced overhead to free up significant cash for creditors, and "give Hilo Hattie the resources to strengthen its overall operation." 

"We’ve scaled the company around our signature island fashions and exclusive prints which have long been Hilo Hattie’s core competency, and renewed our focus on uniform and wholesale operations as well as greatly improved e-commerce platform," added Mark Storfer, Hilo Hattie’s chief financial officer. 

Bankruptcy Judge Robert Faris confirmed last month a $5.1 million deal for the store’s landlord to buy back the lease. 

Under terms of the sale, Honolulu Ltd. will pay Hilo Hattie about $4.1 million. Another $1 million will go toward unpaid rent the retailer owes the landlord, which is an affiliate of the Harry & Jeanette Weinberg Foundation. The foundation is owed $2.5 million in back rent, and is forgoing $1.5 million of that debt. 

Jim Wagner, an attorney representing the retailer, said it is expected that about $3 million will be available to creditors after closing costs, administrative fees and moving expenses are paid out of proceeds. 

Hilo Hattie filed for Chapter 11 bankruptcy in February, listing $8.1 million in assets and $13.2 million in debts. 

A hearing date for the plan’s approval is set for Oct. 19.