You are here
DURHAM, N.C. -- A Chapter 11 trustee was appointed to oversee Swifty Serve Corp. and will recommend either Chapter 11 liquidation or conversion to Chapter 7.
Judge Catherine Carruthers of U.S. Bankruptcy Court for the Middle District of North Carolina in Greensboro tapped attorney Richard Hutson as trustee and ordered him to file a report to the court within 30 days of her signed order, according to deputy clerk Shari Grissom. During a hearing last week, Swifty withdrew a motion asking for permission to quickly sell store leases and other assets after multiple objections were raised, according to The Deal.
Carruthers was expected to enter the order appointing Hutson of Durham-based Hutson, Hughes and Powell, Grissom said. The judge also set a Nov. 26 hearing on the trustee's recommendations on the shuttered company.
Swifty Serve, a Durham, N.C.-based gasoline and convenience-store chain partly owned by onetime "M.A.S.H." TV actor Wayne Rogers, filed for Chapter 11 on Oct. 4. in the Greensboro court. In 1997, he joined forces with Durham developer Clay Hammer and reportedly took a 29 percent stake in the Swifty.
North Tampa, Fla.-based Bay Harbour Management, New York's Electra Fleming and Halpern, Denny & Co. of Boston own the rest of Swifty.
Senior lender CIT Group/Business Credit Inc. is one of several parties who objected to Swifty's plans to lift an automatic stay on the company's leases and assets. CIT, which holds a $21.91 million claim, was given permission on Oct. 10 by Carruthers to take possession and then sell all of Swifty's assets.
Swifty wanted what it called greater flexibility to quickly sell its assets. "The debtors ceased operations [one day] before the petition date and CIT needed immediate relief from the automatic stay to take possession of its collateral because the debtors' stores were not operating," Jeffrey Oakes, CIT's counsel in Greensboro at Carruthers & Roth argued in his objection to Swifty's motion.
The company had contended that several parties interested in bidding on store locations had backed out because Swifty must pay rent and other post-petition charges to secured lenders CIT and GE Capital Corp. before making any sales, the report said.
When it shut its doors, Swifty operated 420 stores in 12 Southeastern states and had leased about 181 others. The company argued in first-day motions that before filing, it had received at least one formal offer to buy 192 of its stores but CIT refused to agree. CIT claimed that Swifty should defer to its senior lenders as the most responsible party to handle any sale of assets.
In an interview with Convenience Store News Swifty Serve president and CEO Jeff Hamill, a former 7-Eleven executive, blamed bankruptcy on leasing and financing arrangements that restricted an ability to close money-losing outlets without triggering a default. The company also cited sagging retail sales and reduced margins on gasoline and cigarette sales.
"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.
Only a few years ago, Swifty Serve stood among the most aggressive merger-and-acquisition companies in the c-store sector, gobbling up such notable outfits as Country Cupboard, Time Saver and Pepco.