A failed bid by a partnership to acquire the City and County of Honolulu’s collection of affordable housing has led to a financial dispute between partners in the deal that unraveled last year.

One of the partners, local developer Richard Gushman, seeks to force Honolulu Affordable Housing Partners LLC into bankruptcy so that a trustee can pursue and distribute assets.

Gushman filed what is known as an involuntary Chapter 7 petition with U.S. Bankruptcy Court in Honolulu last week.

Johnathan Bolton, an attorney representing Gushman, declined to comment because the petition is a form of pending litigation.

Gushman claims in the petition that the company’s managing partner, California-based Highland Property Development LLC, failed to repay him interest on two loans totaling $5 million that he made to the company to help secure the purchase of 12 city affordable rental complexes for $142 million.

The city selected Honolulu Affordable in a competitive bid process in 2012 with the intent to upgrade and preserve most of the city’s affordable housing, which has been a major financial drain on taxpayers.

Gushman claims he is owed $297,265 in interest for his $5 million deposit that the city returned after terminating the purchase agreement in January 2014 because of trouble obtaining project financing.

The local developer also said in the filing that Honolulu law firm Gelber Gelber &Ingersoll is owed $64,388. A member of that firm, Stephen Gelber, was the third partner in Honolulu Affordable.

The partnership is insolvent, according to the petition. Yet Gushman said in the filing that expensive studies and surveys commissioned by the company to analyze the deal could possibly be monetized.

"Despite the urging of (Gushman) that the debtor and its managing member (Highland) take steps to monetize this valuable asset, the debtor has failed and/or refused to do so,"the petition said.

Another Honolulu Affordable asset might be claims against the city, though Gushman’s petition does not expressly state that such a claim should be pursued.

Honolulu Affordable previously blamed the city for wavering over whether to complete the sale, and said the wavering undermined the company’s ability to obtain financing for the deal, which also entailed spending $50 million to upgrade residences.

Right before the deal collapsed, company officials said the city would be responsible for $4 million that Honolulu Affordable spent trying to complete its purchase, plus $2 million in damages.

Gushman’s petition said the purchase contract gave the company the right to $2 million in liquidated damages.

The city has previously disagreed with Honolulu Affordable’s argument over damages.

Another potential source of money that Honolulu Affordable might be able to recover is $268,562 refunded to the company in October by the Hawaii Housing Finance and Development Corp., a state agency through which Honolulu Affordable was seeking financing.

This money was a portion of a deposit the company made to the agency, according to Gushman’s petition, which suggested the refund was improperly transferred to Highland.

Representatives of Highland, a firm formed in 2003 to acquire and revitalize affordable housing, could not be reached for comment last week.

Highland, according to Gushman’s petition, has claimed that the interest on Gushman’s loan should be "start-up costs" contributed to Honolulu Affordable.

The petition also said Highland claims that it should be paid first if any monetary recoveries are made by Honolulu Affordable because it paid more than $120,000 to cover other Honolulu Affordable debts, including a legal bill from its law firm Nixon Peabody.