From Default to Bankruptcy
Gas supplier may be key to Convenient Food Mart Chapter 11 filing
PAINESVILLE, Ohio -- Could defaulting on a court-imposed payment plan to a gasoline supplier have been the last straw that forced Convenient Food Mart into bankruptcy protection this past week? The supplier and other sources say it is.
We have a court-ordered judgment against them, and they defaulted on that, Russ Sposit, president of Countywide Petroleum, North Royalton, Ohio, told CSP Daily News. We, in turn, went through the legal process to garnish cash flow and income [from them], and they elected to go into bankruptcy instead.
Painesville, Ohio-based CF Capital Assets, Convenient Food Mart's parent company, filed for Chapter 11 bankruptcy protection on June 2. The company did not offer an explanation for the filing in the paperwork filed in a Wilmington, Del., courthouse. And Countrywide Petroleum is not among the creditors listed on the documents. Repeated attempts to reach Convenient Food Mart CEO John Call and the company's attorneys for comment have been unsuccessful.
Sposit said the judgment against Convenient Food Mart is for in excess of $500,000." He added, "They appealed the decision of the court, and that took a period of time, and through that process, they were paying the monthly [dues]. Then they elected to just stop. When the court overturned their appeal, they just stopped paying.
That was in late April, when a proposed settlement of the case was thrown out of court following Convenient Food Mart's reluctance to sign because a judgment entry would alert others in the field to the financial terms of the settlement and Convenient feared that those others would take advantage of Convenient's marginal financial stability for their own personal gain, according to a court document accessed by CSP Daily News.
Sposit said the initial lawsuit between his company and Convenient Food Mart dates back to 2001 and the convenience store chain's reluctance to pay its debt. We were their gasoline supplier for seven or 10 years, Sposit said. They ran their expenses up in excess of $1 million, and they weren't paying in a timely manner. So we said we'd rather not supply them anymore and [asked them] to just pay us off, and they couldn't.
In the bankruptcy papers, the company listed assets and debts each of $1 million to $10 million. Its largest creditor was listed as Lyden Oil Co. of Youngstown, Ohio, with a claim of $465,000.
Chapter 11 bankruptcy is familiar territory for Convenient Food Mart, which went through reorganization in the late 1980s and early 1990s. At that time, the company's woes were said to have stemmed from poor management decisions and the burden of leveraged debt that came with growing too rapidly at the retail level. The company was one of the largest convenience chains in the country at 1,375 stores. It currently has 325 stores in Illinois, Indiana, Missouri, Nebraska, New York, Ohio, Pennsylvania and West Virginia, according to the company's website.