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KANSAS CITY, Mo. — GasMart USA Inc. and its 42 Jumpin' Jimmy's convenience stores and gas stations will continue to operate during the bankruptcy process thanks to a $1.55-million loan.
At a court hearing July 7, Judge Arthur Federman gave the go-ahead for GasMart officials to spend the loan from UMB Bank NA while they look for buyers for some of the stores. The c-stores are located in Iowa, Illinois, Indiana, Nebraska and Wisconsin, according to Dow Jones & Co.'s Bankruptcy & Debt.
The retail chain employs more than 300 people and took in roughly $338 million in revenue last year.
GasMart filed for Chapter 11 voluntary bankruptcy protection in the U.S. Bankruptcy Court in the Western District of Missouri. The company's filing listed debts of almost $14 million, as CSNews Online reported July 6.
GasMart and several affiliates cited an aggressive expansion plan in 2012 for the financial fallout, Dow Jones reported. Its gas stations have been cut off from Phillips 66, its biggest supplier, leaving "many of the [company's] locations 'dry'" shortly before the Fourth of July weekend, company lawyers said in documents filed in the U.S. Bankruptcy Court in Kansas City, Mo.
GasMart was founded in 1995 and grew its footprint over time before making two major transactions in 2012: the purchase of 41 Jumpin' Jimmy's locations in southern Illinois for $13 million, and a deal to manage 36 Phillips 66 stores in Kansas and Missouri. The company's store count peaked that year at 108 locations.
"This blistering pace of growth and the associated debt would prove to be an issue for the [company] going forward," said Chief Executive John Tittle Jr., who noted the company has since made deals to sell some locations. "The [company and its affiliates] more than doubled the number of locations that they were managing with no real cash resources to support this activity."
Tittle added that "a number" of the company's stores are losing money, including because of street work that has blocked some store entrances," the news outlet said.
In addition to issues at the store level, GasMart officials have fought in an expensive legal battle between the two families — the Gustin family and the George family — that split ownership of the company.
Lawyers for the Gustin family argue that they are owed more than an offered $1.275-million payment for the value of the shares held by Abraham Gustin, the co-founder of Applebee's who died in 2010 with a 25-percent stake in the company. The Gustin family is seeking a $28-million payment, Tittle said.
According to Dow Jones, the company has also had trouble making payments to Illinois tax collectors. A fuel supplier in that state placed a temporary hold on GasMart's account, causing grocery suppliers to stop discounts.
"GasMart lost foot traffic in its Illinois stores that it has yet to regain," Tittle stated in court papers.
By the time GasMart officials put the company into bankruptcy protection, one of the company's lenders had taken steps to foreclose on its Jumpin' Jimmy's locations. The bankruptcy halts that maneuver, the report explained.
GasMart and its affiliated companies owe more than $12 million to unsecured creditors in addition to roughly $25 million in loans to seven groups, according to court papers.