"Our plan is to regain possession of the stores and bring to them a new tenant who [image-nocss] is qualified to operate convenience stores and has the financial resources to operate them successfully," Jeff Benedict, Appco's former CEO and the president of MacLean's property-management companies, told the newspaper.
As landlord over 28 Appco stores owned by Sunshine Energy, MacLean's companies had terminated leases in March after several months of trying to get Sunshine to pay rent on time, pay back property taxes and carry out certain repairs and maintenance. MacLean gained default judgments on 22 of those stores in May and had repossessed and closed 12 of themleaving 42 employees to collect unemploymentwhen Sunshine declared Chapter 11 bankruptcy June 10.
Sunshine, which just bought the 47-store chain last September after Titan had put it in bankruptcy in February 2009, received a bankruptcy-mandated "automatic stay" on further repossessions when it filed, on a day MacLean's people were about to close seven more stores, including a handful in the Johnson City area. Sunshine, owned by Florida billionaire and U.S. Senate candidate Jeff Greene, then filed a request to have the default judgments overturned and nine of the 12 closed stores returned to it (the other three are in Virginia and would require a separate hearing), said the report.
In denying Sunshine's motion, Parsons was reportedly not impressed by Sunshine's legal arguments during a day and a half of testimony. Those arguments, led by attorney Mark Dessauer, suggested the lease terminations were invalid, maintenance requirements were not specific enough and Sunshine was misled into believing MacLean was not really planning to begin closing stores, the Press said.
Benedict testified he sent multiple letters to Sunshine between January and March regarding the problems, and even warned Greene last August 31 that significant maintenance issues existed and they would be Sunshine's responsibility. He also described a phone call to Sunshine attorney Roger Dade on May 4 to tell Dade about May 6 hearings over the properties and give him a chance to hire a local lawyer and get those hearings continued.
Dade returned the call May 5, and Benedict described telling him that if he found a local attorney that attorney could call MacLean's lawyer, Rick Bearfieldotherwise the default cases were going forward.
Despite this, said the report, Dade testified Wednesday he was "shocked" to learn June 2 that the store closings had begun. Parsons did not believe that after hearing two days of arguments, the paper added, including detailed descriptions of the numerous correspondence sent to Sunshine that were never acted upon or answered.
"The conduct by the debtors demonstrated a willful disregard of the state court proceedings," she said in her opinion, according to the report. In fact, she added, no one from Sunshine even bothered to check between May 6 and June 2 and learn whether the judgments for possession had been approved.
Parsons also sided with the landlords in the matter of Sunshine's failure to perform maintenance and repairs as required by their leases, the report said. Dessauer had argued that the requirement to keep the store properties "in good repair" was subjective and open to interpretation.
Parsons, though, referred to testimony by MacLean's project supervisor, Echol Head, about the stores' condition. Head conducted thorough checks of property conditions in February and again last week, finding significant problems at virtually every store. He also said roughly half the serious problems had arisen during Sunshine's tenancy.
Parsons ticked off some of the most serious problems, including bad roof leaks and broken heating and air systems, and said the evidence of unaddressed repair and maintenance needs by Sunshine was "overwhelming regardless of the definition [of good repair] utilized."
Summing up, Parsons implied that several hours of arguments by Dessauer, buttressed by witness appearances by Dade and Sunshine CFO Bob Brown, did nothing to convince her that the landlord did not have every right to repossess the store properties. Rather, she seemed to agree with one of MacLean attorney Bearfield's closing statements that Sunshine "slept on its rights, and it lost them," said the paper.
The result leaves uncertain the future of "Sunshine East," as the Appco stores are collectively known, said the Press. If MacLean gets all 28 of his properties, that would leave just 19 other stores.
MacLean's companies also have filed a motion to have the bankruptcy itself dismissed, claiming it was simply a method to prevent further property repossessions. That is scheduled to be heard July 12, but Benedict said other motions could be filed before then trying to allow for repossession through a "relief from stay," despite the ongoing bankruptcy.
"The issues with respect to those other stores are exactly the same as what was argued the past two days," Benedict said.
He said it is MacLean's hope that the situation could be resolved soon enough for many of the store employeeslaid-off ones from the closed stores and those at the other 16 locations that remain opento have a chance at jobs with a new operator. A number of those employees have worked at Appco stores for years, including when MacLean owned them and Benedict ran them.
Dessauer, who has filed a motion for "debtor in possession" financing for Sunshine, said after the hearing he would consult with his clients as to whether they still wanted to pursue that financing, the paper reported.
(Click here for previous CSP Daily News coverage.)
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