Appco Thrown a Lifeline
Judge rules cash collateral can be used to pay employees, insurance premium
GREENEVILLE, Tenn. - A court ruling yesteday will allow financially strapped Appalachian Oil Co. to keep its head above water for at least a few more weeks. The company was in court yesterday for a hearing on releasing the funds necessary to pay employees and insurance premiums. Company employees didn't get their paychecks Friday.
Yesterday, unsecured creditors who collectively are owed more than $7 million had a chance to question Appco representatives, who filed Chapter 11 Feb. 9, at a hearing in Greeneville, Tenn. Titan Global Holdings, a Richardson, Texas-based company, [image-nocss] paid $30 million, mostly in borrowed funds, to buy Appco from local businessman James MacLean in September 2007, according to a report in the Kingsport Times-News.
Along with large creditors, such as oil companies, grocery vendors, landlords and Western Union, unsecured creditors range from local governments that are owed taxes (nearly $21,000 in Johnson City's case) to mom-and-pop convenience stores that once got their fuel from Appco. Quick Superette No. 2, for instance, is owed $11,055.50, and the total list of creditors includes hundreds of names.
Those facts were included in the schedule of assets and liabilities Appco filed Thursday. The schedule listed Appco's assets at nearly $15.7 million, and its liabilities at more than $19.4 million, according to the newspaper report. Appco's "secured creditor," Greystone Business Credit, has first priority on Appco's assets and is owed more than $11.6 million.
The exhaustive schedule of assets and liabilities also showed that Titan, or in a few cases Titan subsidiaries, received more than $3.5 million in "intercompany cash transfers" from Appco between Feb. 18, 2008, and Feb. 1 of this year.
Yesterday afternoon, Judge Marcia Parsonsruled Appco coulduse its "cash collateral" to pay its 451 employees for last Friday's payday and to pay utility deposits and a group health insurance premium, according to court documents.
For three consecutive Fridays in February, Parsons OK'd the use of collateral so Appco could make payroll. With the arrival of a new month, Appco owner Titan Global Holdings, based in Richardson, Texas, faced a health-care premium of about $48,000. Additionally, a motion filed Friday by Appco attorney Mark Dessauer requested up to $145,000 for utility deposits and states Appco has been negotiating with the numerous utilities to which it owes money. The total requested amount was about $430,000.
When Judge Parsons decided whether to allow use of more collateral, she made her decision with the knowledge that Titan representatives have so far been unsuccessful in a plan they laid out Feb. 27 to get gas into Appco's 58 convenience stores. At the Feb. 27 hearing, a lawyer for Greystone Business Credit opposed any further use of collateral and suggested Titan's recovery plans for Appco were unrealistic., but Parsons opted to give the gasoline deals (most Appco stores haven't had gas since around the first of the year) a chance.