CENTENNIAL, Colo. — A locally based convenience store chain has filed for Chapter 11 bankruptcy.
Western Convenience Stores Inc. made the move on Dec. 28 after a creditor claimed the gas station operator defaulted on a 2014 agreement and moved to take over 37 of its 43 gas station businesses, according to court documents, BusinessDen.com reported.
Western Convenience runs 43 gas stations in Colorado and Nebraska. The company reported about $250 million in gross sales for 2014.
According to court documents, the convenience store retailer owed Suncor, a gasoline supplier, $5.35 million as a result of a forbearance agreement the companies entered into late last year, and Suncor claims a lien on all assets owned by Western Convenience.
In a declaration entered by Western Convenience owner Hossein Taraghi, Taraghi claims Western Convenience made all its required payments to Suncor until October. At that time, the declaration states, "the debtor's delay in obtaining a refinanced note from another lender due to the sale of the note by the prior lender, led to a claim of default by Suncor."
Western Convenience disputes that an actual default occurred, the declaration states, and last month sought a preliminary injunction to halt Suncor’s collection efforts. That motion was denied, according to the news report.
Lee Kutner, an attorney representing Western Convenience Stores, said the company never missed a payment to Suncor. He said nothing went wrong with the retail chain's business operations, and the bankruptcy filing came only after the delay in Western Convenience's loan refinance.
"It took them a while to rewrite the loan and extend it," Kutner said. "They ultimately did that, but Suncor claimed a default under their forbearance agreement."
According to BusinessDen.com, the Chapter 11 filing, submitted to U.S. Bankruptcy Court, estimates assets and liabilities between $1 million and $10 million. In addition to Suncor, Western Convenience owes secured debts to fuel vendor Offen Petroleum, High Plains Bank and Vectra Bank, according to court documents.
Western Convenience lists unsecured creditors including the Colorado Lottery and various snack food and soft drink vendors.
The convenience store operator requested the court's permission to use its own cash collateral and access its bank accounts to run its c-stores. The company argued that while creditors may have a claim to cash on hand, the business will cease to operate if it can't buy merchandise and pay its 370 employees, the news report added.
Western Convenience makes the bulk of its revenues off of fuel sales, according to court documents, and projects gas revenues to hit $12.5 million for the next month. Those projections estimate the fuel will cost about $11.75 million to buy, leaving a margin of only about $750,000.
Merchandise sales have much better margins, according to Western Convenience's projections. The company estimates it will sell $2.75 million worth of merchandise in the next month with a profit margin of $860,766.
Taraghi owns the land for 37 of his 43 gas stations, court documents state, and leases the other properties. Kutner said Suncor does not have any claim to Taraghi's real estate holdings.