Crescent Oil, owned by Richardson, Texas-based Titan Global Holdings Inc., filed for Chapter 11 bankruptcy protection February 7. Its cash-flow crisis has weakened its distribution chain and caused the closing, at least temporarily, of a Shell station in Tulsa, said the report.
Other Shell stations are suffering supply problems and are working with Crescent Oil to find alternatives, the report said.
Crescent Oil's special projects manager, Robert Lopez, told the newspaper, "Right now Crescent is doing all it can to get the supply back into stores. Everything we do has to be approved through the bankruptcy court."
Lopez said the downtown Shell station was closed "strictly for economic issues." Drivers who pulled into the station Wednesday afternoon found a door sign stating, "We are closed till further notice" and yellow plastic covers over the pump handles. "We own that store," Lopez said. "That store isn't viable at this time." He would not elaborate on the store's future nor any other details behind its closing.
Crescent Oil is one of more than 100 gasoline distributors that do business statewide and is a member of the Oklahoma Petroleum Marketers & Convenience Store Association. Vance McSpadden, the group's executive director, called Crescent Oil "a major distributor" and pointed out that the company is trying to help its customers get gasoline through alternative suppliers when possible. "They're trying everything they can to get back in business," he told the Tulsa World. "They're good people; it just happens" when there is a bankruptcy.
McSpadden said Crescent Oil is not a fee-based transporter. Instead, it buys title to the gasoline it moves to retailers.
He said that he knows this sort of short-term disruption can cause long-term harm for a business. "If you went into a service station and it didn't have gas, you'd think something's wrong," he said. "You'd think twice about coming back."
Valero spokesperson Steve Lee told the paper that its Tulsa stores were experiencing no problems with gasoline supply.
Meanwhile, along with Crescent Oil, Titan Global's Blountville, Tenn.-based Appalachian Oil Co. (Appco) also filed for bankruptcy in February.
And a third case is unwinding in Delaware. There, on February 2, the trustee representing parties owed money by a third Titan Global-owned firm, USA Detergents Inc., accused Titan, its top executives and former Milwaukee real estate developer and Titan Global investor Frank P. Crivello of seeking to enrich themselves at the creditors' expense, reported The Milwaukee Journal Sentinel. That accusation is false, Bryan Chance, Titan's president and CEO, told the paper.
The reorganization filings of the two gas station chains were related, and both were driven by the plunge in oil prices since last summer, Chance said.
Crescent Oil had debt problems before Titan Global's purchase, Chance added. He said that with the acquisition came negotiations to restructure Crescent Oil's debt. Part of the restructuring was to be funded by Appco's lender, Chance said. But those plans failed, and ultimately Crescent Oil's senior lender declared default, Chance said. Meanwhile, he told the paper, Appco saw its borrowing capacity squeezed to unsustainable levels as the value of its collateral declined with the falling oil prices.
Different circumstances surround USA Detergents. Titan Global acquired 80% of the stock of the cleaning-products manufacturer in October 2007. The following February, creditors forced the company into Chapter 7 bankruptcy.
Chance said Titan Global had been deceived about the true value of USA Detergents before acquiring a majority stake. Titan Global alleged fraud in a lawsuit it filed against two former USA Detergents executives in January 2008. A federal judge later dismissed the suit over jurisdictional and process issues. Rather than being enriched, Titan has lost more than $2 million on USA Detergents, Chance said. He said the bankruptcy trustee's claims are frivolous.
Click herefor previous coverage of the Crescent Oil bankruptcy.
Andclick here for previous coverage of the Appco bankruptcy.
Alsoclick here for previous coverage of Titan's woes.
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