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NEW YORK -- Getty Petroleum Marketing Inc. (GPMI) has received good news and bad news regarding its Chapter 11 proceedings being heard before the U.S. Bankruptcy Court, Southern District of New York.
Here's the good news for the company: U.S. Bankruptcy Court Judge Shelley C. Chapman awarded GPMI nearly $5.2 million in a breach of contract dispute over Green Valley Oil LLC's alleged failure to pay rent, reported Law360.
Chapman agreed with GPMI that Green Valley, a former sub-lessee of 239 convenience stores and gas stations, failed to pay rent for the months of December 2011 and January 2012, and ruled that Green Valley must pay the rent -- plus interest -- which equals $5,179,785.41.
According to the news service, Green Valley argued that it should not pay rent for the two months in question as it feared the payment would go to an inappropriate party following GPMI's Dec. 5 Chapter 11 bankruptcy filing.
However, in its complaint, GPMI stated that Green Valley "inexcusably failed to pay December 2011 or January 2012 rent pursuant to the terms of the sublease to the debtors, into escrow, or to Getty Realty (Corp.)," the news outlet reported.
Getty Realty was the owner of 799 properties, which it subsequently leased to GPMI under a master lease. GPMI then sub-leased some of those locations to Green Valley.
As for the negative news regarding the GPMI bankruptcy, New York City recently filed an objection to a liquidation plan sought by GPMI's unsecured creditors committee, saying it was not filed in "good faith,"Law360 reported.
New York City argued that the liquidation plan fails to account for GPMI's potential liability to the city for environmental cleanup of leaking storage tanks, according to the LexisNexis-operated website.
The plan should only be approved once debtors and the committee have "undergone the necessary and complex analysis of estimating the costs of compliance with their environmental obligations post-confirmation -- which the committee concedes it has not even begun to undertake -- and a reserve is set aside for such costs."
In addition, the city claimed the liquidation plan interferes with a $3.1 million priority tax claim its Department of Finance has in the case, the news outlet reported.
Also, according to the news source, the city argued the bankruptcy liquidation plan is not likely to provide -- as the unsecured committee claims -- a higher recovery for unsecured creditors than a Chapter 7 liquidation would.