The 13 storesall closedare located in St. Paul, Eagan, Minnetonka, Hopkins, Burnsville, Robbinsdale, Brooklyn Park, New Brighton, Inver Grove Heights and Cannon [image-nocss] Falls, said the report.
U.S. Bankruptcy Judge Dennis O'Brien ordered the auction earlier this month. As reported in a Morgan Keegan/CSP Daily News Flash on Friday, Carollton, Ga.-based Hagen Auction Co. Inc., operating as Hagen Realty Group, will sell off the properties.
The auction is scheduled for mid-November with all sales expected to close before the new year, attorney John Hedback of St. Anthony law firm Hedback, Arendt, Kohl & Carlson told the newspaper. Hedback was appointed by the U.S. Bankruptcy Court to recover assets for TCS' creditors.
"There are a couple of [stores] that are run down, but most of them have been operated in the last six months," Hedback told the paper. "If that's what the buyers are going to do, they could open them up pretty quickly."
One store that would have been auctioned in St. Paul sold for $1.725 million July 30 to Semper Development, Hedback said. Minneapolis-based Semper will replace that store with a Walgreens, city spokesperson Janelle Tummel told the paper. The auction order excluded onsite car wash equipment owned by Shakopee-based Nu-Star Inc., the report added.
The senior secured lender on the properties is Charlotte, N.C.-based Bank of America Corp., through loan servicer Berkadia Commercial Mortgage. TCS Chairman Bruce Nelson estimated owing more than $13.2 million to Bank of America on the sites in a July filing, said the report. The newspaper gave the amounts owed on each site, ranging from about $303,600 to about $1.4 million.
Carl Carter, spokesperson for Hagen Realty Group, told CSP Daily News, "Most of these properties may very well sell for less than that.... It's a soggy market. When it comes down to Chapter 7, and a sale like this, you just don't know. It's going to auction, but while the sale is subject to the approval of the court, all indications are they are motivated to sell. We don't want a situation where people make incorrect assumptions that they won't be in the running. 'Well, they owe more than I'm willing to pay for it.' Well, they might get it."
He said it will be a two-phase auction. First will be sealed bids due November 12, to be followed by the live event on November 15.
Bankruptcy papers filed with the court by TCS's bankruptcy attorney, John Koneck of Fredrikson & Byron, show that the company was founded by Nelson's RM Group Inc. in July 1994. Within two years, the company operated a 72-location chain of Oasis Markets, then the second largest in the area behind now-defunct Tom Thumb Food Markets Inc.
TCS made record profits in 1999 and 2000, according to one filing cited by the Business Journal. In 2001, RM Group and TCS formed Twin Cities Avanti Stores (TCAS) to buy about 120 Minnesota, Wisconsin and South Dakota gas stations from Avanti Petroleum Inc.
TCS and TCAS expected to minimize overhead expenses and fuel-supply costs by sharing management and an office.
The Avanti sites were "heavily leveraged" and the out-state markets difficult to service and operate, Koneck wrote. TCAS filed for Chapter 11 bankruptcy in March 2003 and emerged in September 2004, but remained unprofitable despite selling assets, closing stores and cutting jobs.
In 2009, gasoline supplier Marathon Petroleum Co. cut the companies off when they could not pay for past deliveries, according to the report, causing widespread store closures. Remaining stores suffered from "sporadic" fuel availability and "minimal grocery and tobacco inventory," Koneck wrote.
TCS and TCAS owned or leased 61 gas stations and convenience stores as of June 30, 2009, when they filed for Chapter 11 protection in Minnesota's U.S. Bankruptcy Court, the report said. At that point, 32 stores remained open. Independent dealers took over 25, while TCS and TCAS continued to operate seven Oasis Market, Budget Mart, Happy Dan's and Food-n-Fuel stores. They employed 44 full-time workers and about 20 part-timers, down from about 350 employees a year earlier.
By June 30, 2010, both companies were in liquidation.
All of the sale proceeds, except for a "small carve-out" for the auctioneers and trustee, will go toward satisfying TCS' debt to Bank of America, Hedback said.
TCS owed nearly $4 million in state gasoline taxes and at least $5.6 million to other creditors when it filed for bankruptcy, said the report. The remnants of TCS leaves few assets for unsecured creditors to recover, Hedback said.
"All of the stores are closed down, the warehouses have been vacated, there are no hard assets left besides what's in the stores [and] no inventory to speak of," he said.
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