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DURHAM, N.C. -- Embattled convenience store chain Swifty Serve Corp., once the proprietor of more than 600 units, has filed Chapter 11 bankruptcy, during which the company will forego reorganization in order to liquidate assets.
The company's financial failure means the doors of its remaining 420 convenience stores across seven southeastern states, along with its Durham, N.C., headquarters, have been shuttered. The sudden end of the company -- the nation's second-largest privately owned convenience store chain -- also leaves some 3,200 employees without jobs.
As part of its Chapter 11 filing in federal bankruptcy court in the middle district of North Carolina in Greensboro, Swifty Serve on Friday asked a judge to approve a plan to pay employees.
"The good news is that the Chapter 11 judge ordered that all employees be paid through this past Thursday. Our employees weighed heavily on my mind. I wanted to be sure no one was going to be working without our being able to pay them," said president and CEO Jeff Hamill, a former 7-Eleven executive.
In an interview with Convenience Store News, Hamill blamed low gasoline margins for the bulk of Swifty's financial woes, coupled with eight major acquisitions in the last four years that were never completely integrated into the company.
"When I came on board in May from 7-Eleven, the company had heavy debt. I was brought on board to turn this company around or sell it. I could never get the company to grow because I had to focus on working with lenders, working on improving our cash position and on debt reduction," Hamill said.
The executive, along with his leadership team, including Danny Tewell, senior vice president of merchandising, Tom Navarre, senior vice president of gasoline, and Brad Jenkins, vice president of operations, was able to make some positive strides. They reduced overhead by $4.5 million, flattened the organizational structure and streamlined the field team, improving communications throughout the company. Same-store sales went from negative numbers to positive over this past summer.
"If the lenders had agreed to work together with Swifty Serve by the middle of September, this had very strong prospects for success," Hamill said.
Hamill expressed optimism over finding a buyer for the chain, which he had hoped to do before being forced to close the stores due to one of the lenders' refusal to continue to supply operating funds. "We tried to sell the chain because we believed there was a lot of value in what we had to offer a buyer. We just didn't have enough time to make that happen," he said.
The chain has three or four interested buyers, Hamill said. Industry insiders have named The Pantry Inc., Alimentation Couche-Tard Inc. and MAPCO Inc. as interested parties, primarily because they are all in good financial positions to play the role of bargain hunters and acquire the few profitable sites among scores of older and smaller units.
Swifty Serve initially began reorganizing operations late last year. Clay Hamner and former "M*A*S*H*" star Wayne Rogers, who created the current Swifty Serve in the late 1990s on a model premised on acquiring smaller chains and drawing maximum profit on core categories, stepped down as co-chairmen earlier this year, while remaining on the board of directors.
In addition to the Swifty Serve name, the chain also operates under the brands of Sav-A-Ton, Townstar, Pepco and Majik Mart. The chain recently ranked 24th in the Convenience Store News Top 50 report. -- John Lofstock contributed to this report.