"We were disappointed, but not surprised, to learn that Sunshine Energy had chosen to file bankruptcy," he told the newspaper. Benedict still [image-nocss] works with MacLean, whose Management Properties Inc. owns the land and buildings at 28 of Appco's 40 or so stores. Sunshine leases all its Appco properties.
A recent court ruling, which Benedict said came after MPI spent months trying to get Sunshine to stay current on rent and otherwise abide by its store leases, paved the way for MPI to begin locking the doors on Appco locations it owns, said the report. Benedict said he had also been trying to convince Jeff Greene, the owner of Independence, Kansas-based Sunshine, to sell the stores if Greene was not willing or able to adequately fund their operation.
Greene, a Florida real estate financier who made hundreds of millions of dollars buying credit default swaps in a correct bet that the real-estate market would turn sour, and who recently announced a U.S. Senate bid, purchased the chain out of bankruptcy last September, the report added. MacLean had initially sold the company, but not his properties, for $30 million to Titan Global Holdings in September 2007. Titan filed Chapter 11 in February 2009. Greene paid $6.25 million for Appco, and also bought a convenience store chain in Kansas that Titan had in late 2008 and declared bankruptcy on days before the Appco bankruptcy.
Three months after the purchase, Greene associate Bret Berlin told the paper that Sunshine had big plans for the then 47-store operation, which extends into southwestern Virginia and southeastern Kentucky. Berlin said in December that Sunshine would rely heavily on Appco employees left over from the MacLean days, and planned to grow in the area, said the report.
"We have a strong base of very smart, very experienced team members here, everyone knows what to do and how to do it, and the problem is under previous management they weren't given the resources," Berlin said. He also said Sunshine planned to put enough money into the stores to get them competitive again.
"There was deferred maintenance under the previous owner, and there's a lot more to do," Berlin said in December. "We're three months into this, and we've taken those critical first steps."
The manager of one closed location was not surprised at the stores' direction of the past few months, saying employees' high hopes last September turned to doubt as months went by and Sunshine management failed to spend enough to make the stores competitive again. In fact, the manager told the Johnson City Press, stores continued to have deferred maintenance issues, often were out of grades of gasoline, came close to having utilities shut off for nonpayment and were understaffed.
Benedict echoed that contention, and said those factors were among the reasons MPI hoped it could persuade Greene to consider a sale, the report added.
"We are in discussions with other convenience store companies that are interested in running the stores," Benedict said Thursday. "We hope to be able to select a well-qualified tenant in the near future. Unfortunately, Sunshine's bankruptcy filing may delay that process with respect to some of the stores. We will be required to go before the bankruptcy court to get permission to continue to enforce the orders of possession we have already received from the various courts in Tennessee and Virginia."
The bankruptcy filing leaves the stores' future more in flux than ever, said the report, and the employment future of workers at 12 already closed stores in limbo. Benedict said under bankruptcy law, those 12 stores will not be part of Sunshine's bankruptcy.
"We are all concerned for the employees of the stores that have been closed and those who are anxious about what the future may bring," Benedict said. On June 2, the day MPI began repossessing store properties, Benedict said there were some "viable possibilities" for new ownership that could potentially save the jobs of some Appco employees.
"Hopefully, Sunshine's bankruptcy filing will not significantly delay the resolution of these problems," Benedict told the paper Thursday.
Benedict suggested the bankruptcy may have been Sunshine's easiest method of preventing the 16 remaining MPI-owned stores from closing. With the Chapter 11 filing, an "automatic stay" took effect that will prevent MPI from closing any more of the locations it owns, said the report, including four in Johnson City. He said Appco's renewed difficulties stem from Sunshine failing to stay current on rent, not paying property taxes on the MacLean-owned stores and failing to meet some other lease conditions.
"The landlords have given Sunshine Energy many opportunities to cure their lease defaults by paying the past due rents, paying the past due property taxes and complying with other terms of the leases," Benedict said. "Sunshine has been unwilling or unable to take advantage of those opportunities."
(Click here for previous CSP Daily News coverage.)
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