HILO, Hawai'i — A Big Island developer who provided $13 million in personal guarantees to obtain a construction bond on a state Department of Hawaiian Home Lands housing project has now filed for personal bankruptcy.

The bankruptcy filing by developer Fred Yamashiro and his wife Gwen lists $19.9 million in liabilities and less than $650,000 in assets, with the largest single liability listed as a $13 million unsecured guarantee Yamashiro made to bonding company Hardware Hawaii.

Hardware Hawaii in turn bonded construction for dozens of homes Yamashiro was hired to build for lessees of Hawaiian Home Lands on the Big Island, Lana'i and Kaua'i. Yamashiro's financial problems have delayed construction of those homes, some of which have been standing half-built or without roofs throughout the heavy December rains in Hilo.

Yamashiro's Menehune Development Co. Inc. and Fredco Inc. filed for bankruptcy earlier last month, and Yamashiro filed for personal bankruptcy on Dec. 31.

Yamashiro, who is president of Fredco Inc., has said he mistakenly underbid the projects several years ago, and told Hawaiian Homes officials his company won't be able to complete work on 132 lots at various stages of development on the Big Island, Kaua'i and Lana'i.

Yamashiro's bankruptcy lawyer, Bradley Tamm, said the personal bankruptcy filing should clear the way for bonding company Hardware Hawaii to complete construction of the half-finished homes.

"Hardware Hawaii has been delaying the process of paying up on the bond to complete the projects for the local owners, indicating that it was the Yamashiro's responsibility to pay," Tamm wrote in an e-mail. "Now that the Yamashiros are in bankruptcy, Hardware Hawaii will no longer be able defer performance on that basis."

"The Yamashiros regret this situation deeply. They were simply left with no alternative; they had no funds to continue with their business operations, and exhausted their personal wealth trying to keep the businesses running," Tamm wrote.

Jeff Ashmore, a representative of Hardware Hawaii, declined to discuss the status of the bonds or the projects.

The bonds are "a private matter between Hardware Hawaii and the owners of the homes, the lessees, and we're not at liberty to discuss any aspect of the bonding matter," Ashmore said.

The Department of Hawaiian Home Lands notified lessees in a Jan. 2 letter that it is monitoring Hardware Hawaii's actions, and "up to this point, we believe they are taking the necessary actions to move into construction shortly."

The Senate Agriculture and Hawaiian Affairs Committee will hold a hearing today on the Fredco case, with senators planning to question Hawaiian Homes officials and beneficiaries about the impact of the case.

Dozens of Hawaiian homesteaders borrowed money to finance construction on their leased lots, and the delay means some will be struggling to both pay rent and also a mortgage on a house left unfinished by the Fredco collapse.

Technically the construction contracts were between Fredco and the lessees, but Hawaiian Homes Commission Chairman Micah Kane has said his department has a moral obligation to help the lessees because it was the department that selected Yamashiro as the developer for the projects.

Hawaiian Homes has offered emergency cash grants of up to $750 through the Council for Native Hawaiian Advancement for homesteaders who are in a crisis situation because of the Fredco failure, and is arranging for lessees to be reimbursed for "various qualifying expenditures" such as additional interest charges because of the construction delays.

The department also told lessees in its Jan. 2 letter that it plans to intervene with its own contractors if there are disputes between Hardware Hawaii and the lessees.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.