GREENEVILLE, Tenn. -- The APPCO convenience store chain's owner handled some things poorly in the run-up to its June 10 bankruptcy filing, but those mistakes were not serious enough to dismiss the case, Bankruptcy Judge Sharon Parsons said Tuesday, according to a report by The Johnson City Press.
Parsons denied a motion from APPCO's former owner, Jim MacLeanwho still owns 28 of the chain's 47 store propertiesto dismiss the bankruptcy as a "bad-faith filing," said the report.
MacLean's lawyer, Rick Bearfield, had argued that Sunshine Energy (owned by Florida [image-nocss] Senate candidate Jeff Greene) filed Chapter 11 bankruptcy only because MacLean had begun repossessing the store properties and the Chapter 11 filing put the remaining stores under a protective "stay."
Parsons said while that may be largely true, "filing bankruptcy on the eve of foreclosure is not unusual." She said the burden of proof that a filing was in bad faith (fraudulent) was on Bearfield, and the bar was set high, the newspaper reported.
While Sunshine showed "reckless disregard of the state court proceedings" that led to possession being granted to MacLean's company, among other mistakes, "in my view this is not a case that falls into the 'it stinks' category," Parsons said. "I do not see this case as an abuse of the bankruptcy process."
Bearfield had argued that since Sunshine did not owe any other creditors money, the filing had essentially a way for Greene to protect his assets. It took place, Bearfield said, "for the benefit of the sole person who stands to gain from this, and that's Mr. Jeff Greene."
Parsons' decision did not mean the news was all bad for MacLean, said the report. He retains possession of the 12 stores taken back before June 10, it said. Parsons will hear a motion from Bearfield asking that MacLean be granted a "relief from stay" and be allowed to repossess the remaining nine stores it owns in Tennessee, the paper added.
State court judges had granted MacLean the right to take back those additional stores before the bankruptcy, but they had not yet been repossessed. Sunshine has actually closed several of those stores on its own in the past few weeks.
More than 50 people have lost their jobs since the store repossessions and additional closures since the bankruptcy, the paper said.
Parsons also delivered a mandate to Sunshine that its bankruptcy attorney, Mark Dessauer, its chief financial officer, Bob Brown, and its new CEO, Tex Farmer, were not happy about, said the Johnson City Press. The judge, partly on the recommendation of Patricia Foster, the trustee in the case, said Sunshine needed to establish separate bank accounts for the three separate limited liability corporations in the casetwo in Tennessee and one in Virginia.
Up to this point, revenues from the stores have simply been "swept" into an account controlled by the parent company, Sunshine Energy, which also runs c-stores in Kansas that Greene bought out of bankruptcy from Crescent Oil last September, when it bought APPCO, the report said.
Parsons agreed that arrangement could put revenues from the local stores at risk of being paid to creditors in Sunshine's other areas. She said the local Sunshine LLCs must account for all their payments for goods and services to protect the bankruptcy estate.
According to the report, Dessauer, Farmer and Brown had a "heated" discussion with Foster, the trustee, during a break and suggested that requirement may be too onerous. Parsons stuck to her guns, though, and also suggested she would not be in a mood to let the bankruptcy case drag out.
"The debtors have their work cut out for them," Parsons said. "I'm not going to give them a lot of time to do it, because the landlords are being held at bay."
For their part, representatives for MacLean have said he hopes to take back the remainder of his properties and lease them to a different operator in hopes that employees can return to their jobs. Former APPCO CEO Jeff Benedict, who still works for MacLean, told the paper that discussions he has had with several interested companies have him hopeful the stores could reopen and be successful again.
(Click here for previous CSP Daily News coverage.)
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