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GREENEVILLE, Tenn. -- Bankruptcy judge Marcia Phillips Parsons ruled Friday that Blountville, Tenn.-based Appalachian Oil Co. (Appco) can’t pay executives of parent company Titan Global Holdings from cash collateral, yet she did approve a plan to get gas supplies to Appco stores by early this week, the Kingsport Times News reported.
Parsons also ruled that Appco store and management employees can be paid for another week, according to the report.
As part of the fuel supply plan, the judge allowed Appco to pursue fuel agreements with two gas suppliers -- PM Terminals of Roanoke, Va., and Mountain Express Oil Co. of Woodstock, Ga. -- which will allow it to get gas to its 58 convenience stores within days, according to company representatives. In some cases, Appco stores haven't had gas for nearly two months, and supplies of in-store goods including groceries, beer and cigarettes, have dwindled since then, according to the report.
However, a trustee representing Appco’s estate and the interests of creditors described the events since the Feb. 9, Chapter 11 filing as "putting bandages on an open wound," and had grave doubts about the prospects for successful reorganization, the report stated.
In addition, Parsons has not been impressed with Titan Global's financing search. "I don’t know the state of the post-petition liabilities that are still outstanding, and those are normally things that I hear in these types of hearings," Parsons said in the report. Of the fuel supply agreements, she added, "It would appear that this is the best chance of getting some revenue back in so the debtor can meet the rent and the utility obligations that are coming up."
Meanwhile, Glenn Rose, a lawyer for Appco’s main secured creditor, Greystone Business Credit, suggested that "best chance" was slim at best. He said rent on Appco’s stores was due Sunday and totals about $350,000, and that utility providers can legally begin cutting off utilities once a bankruptcy case is 20 days old, according to the report.
"This debtor next week has $500,000 to $1 million worth of obligations that are going to come due and has no basis to fund those expenditures (other than) Greystone’s cash collateral, and there’s really no proof that that cash collateral’s going to do anything other than go down a rabbit hole," Rose said in the report.