Bankrupt Sunshine Wants Stores Back

Bankrupt Sunshine Energy, owner of APPCO, is fighting in the courts to regain its 12 closed convenience stores, which were repossessed by Management Properties Inc., the Johnson City Press reported.

Meanwhile, Management Properties Inc. (MPI)  wants Sunshine’s recently filed bankruptcy thrown out of court, so it can repossess another 16 stores.

According to Sunshine Energy, its main landlord-MPI- a company controlled by former APPCO owner Jim MacLean, should return the 12 store properties it repossessed earlier this month. A court gave an order allowing for those repossessions this spring based on non-payment of rent and property taxes. MPI was in the process of repossessing all its 28 properties when Sunshine filed for bankruptcy on June 10. Sunshine asserts that the repossessions by MPI were based on “unlawful detainer actions” and is asking that the court “set aside … the Tennessee state court actions” and “order that Sunshine TN I and Sunshine TN II be awarded possession of the store locations closed and seized…”

MPI, however, alleges the Sunshine Energy filed for bankruptcy with the intention of thwarting MPI’s lawful right to repossess the stores. MPI won the right to close the locations after going to court earlier this year over Sunshine’s delinquent rent, unpaid property taxes and deferred maintenance issues. MPI’s motion to dismiss the bankruptcy, scheduled to be heard July 12, claims that Sunshine didn’t legitimately need to file bankruptcy and did it to stop MPI from continuing to repossess the stores.

Bankruptcy Judge Marsha Parsons is set to hear the case.  

 

The Plot Thickens

This is APPCO’s second bankruptcy in two years.

Titan Global Holdings, a Texas-based company, acquired the 60-sotre APPCO chain in September 2007 from longtime owner MacLean for $30 million. It then filed for Chapter 11 bankruptcy in February 2009. MacLean retained ownership of about half the stores through MPI.

Then, in September 2009, it sold out of bankruptcy court to Florida Sunshine Investments, primarily owned by Florida billionaire businessman Jeff Greene -a Democratic candidate for U.S. Senate in Florida – who bought APPCO, at $6.25 million for 47 stores and more than 100 dealer contracts, as part of the bankruptcy resolution.

But as aforementioned, MPI has claimed rent payments were chronically late, property taxes weren’t paid per the lease contracts, and crucial store maintenance wasn’t being performed.

Sunshine has filed a motion for approval of debtor in possession (DIP) financing for $750,000, which it would borrow from a California lender called Aviation Plaza Partners, in order to pay May, June and July rents (totaling nearly $400,000), along with $148,000 in back property taxes.

Sunshine claimed in the motion it “has no other source of cash to meet its past due and current obligations under the Leases.”

When MPI won the right in court to repossess the properties, former APPCO CEO Jeff Benedict said MPI’s hope was to gain possession and market them to a tenant that could operate them successfully enough to meet their lease contracts. MPI’s motion claims Sunshine’s “primary motivations for filing bankruptcy” were to stop that process. It has not been able to continue repossessing properties since the bankruptcy filing because of “automatic stay” bankruptcy rules. Those rules also prevent MPI from marketing the property it already has.

MPI also notes Sunshine hasn’t filed any schedules or statements of financial affairs, as required by bankruptcy law, and has in fact asked for extensions to file those schedules.

All these factors combined, MPI claims, “suggest that the primary and overriding reason for the Debtors’ petitions was to avail themselves of the injunction provided by the automatic stay.”

Time will tell what the court decides.

 

SOURCE: Johnson City Press. 

 

 

 

 

 

 

 

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