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OGDEN, Utah -- Travel center chain Flying J Inc., its Big West refining and Longhorn Pipeline subsidiaries filed voluntary petitions yesterday to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in Delaware.
As reported first in a CSNews Online newsflash yesterday, the filing will allow Flying J to address its liquidity needs, which stem from the steep decline in oil prices—as of last week oil prices had fallen more than $110 from its high of $145 in July—coupled with the credit market turmoil.
"Even though Flying J today is a successful and historically profitable company, it faced near-term liquidity pressure from an unprecedented combination of factors: the precipitous drop in the price of oil and the lack of available financing from our traditional sources due to disrupted credit markets," J. Phillip Adams, Flying J president and CEO said in a statement. "With this sudden and unanticipated inability to meet our liquidity needs, we regret that we had no other choice than a Chapter 11 filing to enable us to stabilize our financial base."
All of Flying J’s operations, including approximately 250 truck stops and fuel stops, are open with no layoffs necessary, according to Adams. The company listed estimated liabilities between $100 million to $500 million and assets of more than $1 billion, according to documents filed with the court and cited by a Reuters report.
"The good news is we have valuable assets … and we are optimistic we will be able to generate substantial cash internally to allow us to meet our obligations going forward," he added.
Flying J plans to continue its normal business operations as undergoes the Chapter 11 process as quickly as possible to reach a solution to its short-term liquidity needs and meet its past obligations in full, Adams said in the statement.
"In the meantime, our team is focused on continuing business as usual. We appreciate the support and understanding of our vendors and suppliers during this time," he concluded.
Among the company's top creditors were Zions Bancorp, with $85.8 million in outstanding bank loans; ConocoPhillips, with $69.4 million in trade debt; and Barry Petroleum, with $26.1 million in trade debt, according to a Reuters report.
Flying J will continue pay its more than 16,000 employees across the U.S. and Canada in their usual manner, along with their medical, dental, life insurance, disability and other benefits without disruption, according to the company. Suppliers will be paid under normal terms for goods and services provided after the filing date of Dec. 22, 2008.
Flying J’s legal advisor is Kirkland & Ellis LLP and its financial advisor is The Blackstone Group L.P.