Hawaiian Telcom Inc. must consider alternative reorganization plans, allowing Sandwich Isles Communications Inc. to proceed with its $400 million plan to bring the phone company out of bankruptcy, a federal judge ruled yesterday.

U.S. Bankruptcy Judge Lloyd King denied the phone company's request to extend the period in which it had exclusive rights to pursue its own reorganization plan.

"Because of the public's interest, Sandwich Isles must not be denied the opportunity to see if it can present an alternative to the plan that has been filed," King said.

Hawaiian Telcom Inc. had asked the bankruptcy court for an extension to pursue its own $460 million reorganization plan. The company exclusivity period ends Aug. 30, and Hawaiian Telcom wanted to extend it until Sept. 30.

Chris Marcus, attorney for Hawaiian Telcom, argued that Sandwich Isles has no support from the company's lenders, its employees or from Hawaiian Telcom itself. He said Hawaiian Telcom should be able to pursue its reorganization plan because it has made substantial progress toward emerging from bankruptcy.

Gregory Bray, attorney for Sandwich Isles, said Hawaiian Telcom did not allow his company to conduct due diligence or examine the phone company's data room. He said Hawaiian Telcom suffers from "staggering losses," "distant ownership" and "crumbling infrastructure."

"It is hemorrhaging cash," Bray said. "There's no evidence in its business plan that it will be able to make the required capital investment in its system. Their plan is to give the company to the lenders.

"The amount of cash they are hemorrhaging is huge. They may not be around. They might face liquidation. it would be disastrous for the state."