A plan to reorganize kamaaina retailer Hilo Hattie was approved by a U.S. Bankruptcy Court judge today.

The approval, which wasn�t contested, will allow the company to emerge from Chapter 11 by wiping out roughly $14 million of debts to keep the retailer with seven Hawai�i stores and 170 employees in business while preserving numerous vendor relationships.
Confirmation of the plan had been expected since July when Maui Divers, a major creditor and Hilo Hattie vendor, withdrew an offer to buy the company and threw its support behind a competing proposal by another creditor, Royal Hawaiian Creations, which acquired control of Hilo Hattie through a stock purchase in June.
Royal Hawaiian Creations has already invested $1 million in Hilo Hattie, and will invest $3 million more to pay claims necessary for Hilo Hattie to exit bankruptcy about a year after it filed for protection.