(Click here for previous CSP Daily News coverage of Bulk Petroleum.)The Mequon, Wis.-based petroleum distributor and gas station owner has retained Hilco Real Estate, Northbrook, Ill., to sell some or all of the stations.Click here for information, including a list of properties, on the bankruptcy sale of 122 gas station convenience stores operating and closed locations for sale and lease immediately. The bid deadline is Jan. 31, 2010; the auction date is Feb. 17, 2010.
The company filed the proposed plan November 6 after months of negotiations and litigation with its creditors. The company filed Chapter 11 reorganization in February as its business suffered due to the high gasoline prices of 2008, the loss of its BP franchise and plummeting real-estate values, Bulk's attorney Jerry Kerkman told the newspaper.
With creditors jockeying for position in the Bulk bankruptcy case, three have petitioned to place owner Darshan Dhaliwal in personal Chapter 7 bankruptcy, the paper added. The involuntary bankruptcy case was filed December 4 by creditors who claim Bulk owes them a combined $13.7 million. They are National City Bank, CITGO Petroleum Inc. and the Bulk Petroleum unsecured creditors committee.
Kerkman said Dhaliwal preferred not to file for personal bankruptcy, but knew it might happen. "From our perspective, it was expected," he added.
The petition followed Anchor BanCorp of Madison winning a $7.4 million judgment in August against Dhaliwal and several of his corporate entities. The judgment gave Anchor BanCorp a lien against the assets of Dhaliwal and his businesses, said the report.
To prevent Anchor from leapfrogging them in the priority for payments, the three creditors filed the involuntary bankruptcy petition, Kerkman and Fran Lawall, an attorney representing the unsecured creditors, told the Business Journal. The new petition will keep those creditors in a priority position for their claims, Kerkman said.
Bulk, which filed Chapter 11 bankruptcy in February, has proposed a reorganization that includes selling more than 100 gas stations with proceeds paying a portion of the debts. (As of 2006, Bulk operated and supplies fuel to approximately 350 to 400 locations in Wisconsin, Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri and Tennessee, according to court documents obtained by CSP Daily News.)
A new company with Dhaliwal as 49% owner would emerge to distribute petroleum and operate fewer stations, said the report. Longtime Bulk executives Daniel Huffaker and John Gerth would each own 25.5% of the reorganized firm. Dhaliwal would be president.
Although Bulk Petroleum has not received court approval for its plan, it is marketing for sale 57 operating stations and another 50 closed stations, Kerkman said.
Kerkman hopes to win approval for the reorganization in February 2010, the report said.
The company has retained Hilco Real Estate, Northbrook, Ill., to sell stations that are either owned by Bulk or were used as loan collateral, Kerkman said. Some of the stations already have been closed, he added.
"The fact that there is a possibility of reorganizing is good," Kerkman said. "It's just a tough situation and everybody has worked hard."
According to the Business Journal, Bulk's largest secured creditors are Amcore Bank, Rockford, Ill., at $26 million;, Summit Credit Union of Madison, $15.5 million; United Central Bank of Texas, $10 million; and Associated Bank of Green Bay, about $9 million. Those and other secured lenders would receive an estimated $3.8 million in sale proceeds and unsecured creditors would receive $3.1 million.
Amcore Bank attorney Peter Blain of Milwaukee said he expects "quite a few objections" from creditors. He said his client's main goal is to get the assets sold. "We're on board with the general concept," he told the paper.
"We expect there will be extensive negotiations before a plan could go final," Lawall said.
If Bulk Petroleum's Chapter 11 reorganization plan is not confirmed in Bankruptcy Court, the company would convert the case to Chapter 7 liquidation, Kerkman said in a November 6 court filing cited by the Business Journal.
Liquidation would result in a reduction of nearly $2 million in proceeds to secured lenders and $1.1 million to unsecured lenders, the filing said, according to the report.
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