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SPRINGFIELD, Mo. -- Within the next few weeks, the West Des Moines, Iowa-based chain Kum & Go will launch an advertising campaign and change the exterior signs at all but eight of Git-N-Go's former locations, reported the Springfield, Mo.-based News Leader.
Kum & Go chose not to keep four stores in Oklahoma and four in Springfield after paying $9 million for Git-N-Go's assets in bankruptcy court in June. Though Kum & Go still has to pay the same amount no matter how many stores it forgoes, each location it rejects could potentially hurt Git-N-Go's unsecured creditors.
Each broken lease generally rings up another claim to the bankruptcy estate as landlords seek restitution for lost rent. "And that dilutes the pool of unsecured creditors," said Paul Thomas, a trial attorney with the U.S. Trustee Office in the Northern District of Oklahoma.
Tulsa, Okla.-based Git-N-Go, which filed for bankruptcy in January, already has an impressive list of unsecured creditors. According to the bankruptcy court, more than $12 million worth of unsecured claims have been filed. The deadline for filing claims is July 31.
It is unlikely, however, that the court will approve all of those claims, said Sam Stricklin, the attorney representing the unsecured creditors' committee. And in the case of landlords potentially filing additional claims, the benefits to creditors of the sale outweigh the costs associated with rejected leases. "It's better to get the money and then worry about (rejected leases) than not get the money," Stricklin said.
Kum & Go bought Git-N-Go in a fierce bidding war with Sinclair Oil during which the company upped its offer from an original $6.2 million to $9 million. That sale price was an implicit statement that Kum & Go would not close too many stores, Stricklin said. "Why would someone pay $9 million and then close all the stores?" he asked.
The company does not plan to close any more stores, said James Brandt, corporate counsel for Kum & Go. "That's it," he said. "Out of the potential 76 stores, we've acquired 68 of them."