For protection from creditors and as a turnaround attempt, Gas-Mart has filed a Chapter 11 bankruptcy petition.
Gas-Mart officials have received permission to utilize a $1.5 million loan from UMB Bank while the company reorganizes and attempts to find buyers for some of its stores, according to Bankruptcy and Debt Dow Jones. The loan is the company’s lifeline to stay open during bankruptcy.
The move comes following Gas-Mart USA Inc.’s recent Chapter 11 bankruptcy petition due to millions of dollars in outstanding debt.
A report by The Kansas City Star noted that the petition was filed for Gas-Mart as well as for three other entities related to the convenience store operations — Aving-Rice LLC, Fran Transport & Oil Co. and G&G Enterprises LLC. The bankruptcy petition stated that the companies collectively own and operate convenience stores at Phillips 66/Conoco gas stations, and have approximately 49 locations throughout five states.
According to a report by The Kansas City Star, earlier this year, Gas-Mart sold 19 of its stores located in Missouri and Kansas to Travel Centers of America, and the company now operates 42 stores in Illinois, Indiana, Iowa, Nebraska and Wisconsin. Gas Mart recently lost its lease to operate its two most profitable stores along the Kansas Turnpike, which are now operated by EZ Go.
The loss of the two Kansas Turnpike stores is projected to decrease revenue by $50 million for 2015. According to a report by Bankruptcy and Debt Dow Jones, the companies have a secured debt of approximately $25 million in loans, $12 million to unsecured creditors and approximately $9 million in assets, which include taxes and employee salaries. The largest single unsecured creditor is GSA Trust of Littleton Co. who is owed $3.8 million. The petition certifies assets between $10-$50 million, and it is estimated that there will be funds available for distribution among unsecured creditors.
Bankruptcy and Debt Dow Jones reported that Phillips 66, the company’s largest fuel supplier, has discontinued service to Gas-Mart gas stations, and due to a hold placed on its accounts because of an inability to pay taxes, grocery providers have stopped providing discounts to the company. Being cut off from suppliers has caused many locations to run dry.
However, according The Kansas City Star, Gas-Mart co-owner, David George, claimed that the company’s fuel providers, whom are among its unsecured creditors, are supportive and working to help Gas-Mart. He also said that there is a large grocery distributor that is working to help restock the shelves of Gas-Mart stores. The approximately 300 employees of Gas-Mart are aware of the bankruptcy filing and they understand that this is just what the company needs to get back on its feet and move forward.