Bankrupt Sunshine Energy Wants APPCO Stores Back

GREENVILLE, Tenn. -- Sunshine Energy, which owns the APPCO chain of convenience stores and filed Chapter 11 bankruptcy two weeks ago, wants 12 of its stores back after they were repossessed by the locations' property owner, Management Properties Inc. (MPI), the Johnson City Press reported.

At the same time, MPI wants Sunshine's bankruptcy case thrown out of court so it can repossess another 16 APPCO stores. MPI filed a motion to dismiss the bankruptcy case as "bad faith filings," and is set for hearing July 12. Bankruptcy Judge Marsha Parsons was slated to begin working on the case yesterday, according to the report.

In bankruptcy courts in Greeneville, Parsons will hear the convenience store chain's argument that its main landlord, MPI -- which is controlled by former APPCO owner Jim MacLean -- should relinquish the 12 store properties it repossessed earlier this month, the newspaper reported. A court order this spring allowed for those repossessions based on non-payment of rent and property taxes, the Press reported.

Sunshine claims the repossessions were based on "unlawful detainer actions" and asks that Parsons "set aside ... the Tennessee state court actions" and order that Sunshine be awarded possession of the repossessed stores, the report stated. Sunshine's Chapter 11 filing included an "automatic stay" where MPI is prevented from further repossessions and is prohibited from marketing the properties it already has.

In addition, Sunshine filed a motion for approval of debtor in possession (DIP) financing amounting to $750,000, which it would borrow from California-based lender Aviation Plaza Partners, the newspaper reported. Those funds would be used to pay May, June and July rents totaling nearly $400,000, along with $148,000 in back property taxes.

A motion cited by the paper claims Sunshine "has no other source of cash to meet its past due and current obligations under the leases."

Sunshine's attorney Mark Dessauer also claimed the company "is and will continue to be irreparable (sic) harmed" by the stores' closures, the newspaper reported.
Meanwhile, the judge will also hear arguments from MPI that the bankruptcy filing was meant to thwart its lawful right to repossess the stores, and will ask the bankruptcy be dismissed, according to the report.

MPI cited several reasons for its claim of Sunshine's bad faith filing, including that Sunshine's local representatives allegedly said Sunshine had no other past due creditors when it filed Chapter 11 "because they were on a cash basis with their vendors;" and Sunshine hasn't filed any schedules or statements of financial affairs, as required by bankruptcy law, and has reportedly asked for extensions to file those schedules. In court documents, MPI claims these factors "suggest that the primary and overriding reason for the debtors' petitions was to avail themselves of the injunction provided by the automatic stay."

This is the second time in less than two years that the APPCO convenience store chain was involved in bankruptcy proceedings. Sunshine Energy bought the chain through a bankruptcy auction in September 2009 from Titan Global Holdings, which filed Chapter 11 in February 2009.

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