The King Kalakaua Plaza, a struggling Waikiki retail complex that cost $42 million to develop and build, is scheduled to be sold for $3 million as part of the bankruptcy by investment bank Lehman Brothers Holdings.

A motion filed in a New York bankruptcy court Monday says a Lehman Brothers subsidiary will sell the 81,000-square-foot leasehold center on July 13 to a Nevada company unless another buyer steps forward with a better offer.

The sale would be the latest chapter in the financially troubled retail center that opened 11 years ago on a city block bounded by Kalakaua, Kuhio, 'Olohana and Kalaimoku streets. At that time, the project was the first retail center developed in Waikiki in 20 years. It initially seemed destined for success in attracting NikeTown and one of the few Banana Republic flagship stores in the country as tenants.

But the property toward the 'ewa end of Waikiki didn't draw as much pedestrian traffic as hoped and one of its initial tenants, Official All Star Cafe, closed within two years of opening. A third-floor restaurant space never attracted a tenant.

The complex went through a foreclosure in 2006, with a Lehman subsidiary, LB 2080 Kalakaua Owners LLC, taking over the ground leases and building.

Earlier this year, NikeTown said it would close at the end of May, but it remains open until workers at the store receive notice to shut down. The vacant spaces, along with taxes and ground rent, have resulted in losses for the Lehman subsidiary.

Lehman "has determined that the property represents a drain on its estates and resources," said a filing by the Wall Street firm whose bankruptcy kicked off a meltdown of financial markets last September.

"A prompt sale of the property will stem monthly losses incurred by LB 2080."

The filing said the property was given to C.B. Richard Ellis to market in February, which in turn contacted more than 700 individuals and businesses about possibly buying the property for $7 million.

Three offers were submitted, with the sellers settling on a $3 million offer from BV VCM Kalakaua LLC. No details on the potential buyer was listed and a check of Nevada business registrations online showed the firm was incorporated on June 11.

LB 2080 asserted the purchase price was reasonable given the "current depressed market for commercial real property in Hawai'i," the extensive marketing effort, and the purchaser having to assume certain going-forward liabilities.

The financially strapped owner, however, did leave the door open for entertaining better offers on the property. It said in the filing that it will consider superior offers until July 8.