A U.S. Bankruptcy Court in Wyoming has approved Red Eagle Oil Inc. plan to sell off its retail assets. The company is offering its 15 convenience stores in Wyoming for sale individually, in groups or as a package.
Under the bid procedures, parties have until May 2 to submit offers, court papers show. An auction would take place on May 15 should Red Eagle receive qualified bids, according to The (Wyo.) Deal. Though Red Eagle did not name a stalking-horse bidder in court papers, the Cody, Wyo., company did say it may enter into a stalking-horse asset purchase agreement by April 25 under the bidding procedures.
Qualified bidders must submit a deposit equal to 10% of the proposed purchase price at the auction. Within three business days after Red Eagle selects a bid as a winning offer, the purchaser must supplement its initial deposit to make the total deposit equal to the lesser of $1.5 million or 20% of the purchase price.
Matrix Private Equities Inc. is shopping the assets, court papers show.
Red Eagle operates convenience stores and gas stations throughout Wyoming, court papers show. The debtor owns only the land and buildings of two of its locations. The real estate for the remaining locations is owned by affiliate Red Eagle LLC.
The debtor also operates a fleet of vehicles that transport fuel, crude oil and other oilfield commodities throughout Wyoming, Montana and North Dakota. Red Eagle’s distribution system consists of 26 tractors and about 60 trailers, the report said. The company blamed its Aug. 1 bankruptcy filing on the general economic downturn.
In court papers, Red Eagle said difficulty in collecting certain accounts receivable resulted in diminishing liquidity.
According to Vice President Bryan Hinze in the court filing, the company’s problems started in 2009 when the economy started a recession. The owners tried to negotiate “reasonable payment plans” with vendors and creditors. They also sold some of the company’s property; however, that didn’t resolve the financial issues.
Red Eagle could not pay its accounts payable starting in April 2011 and was sued by four of its vendors due to defaults, ultimately forcing the company to file for Chapter 11. Dats Trucking Inc., Equitable Oil Purchasing Co., Hermes Consolidated Inc. and Sapp Brothers Inc. all sued Red Eagle before its bankruptcy filing.
Red Eagle’s largest secured creditor is Pinnacle Bank, which holds a first-priority lien on the debtor’s assets. Pinnacle is owed about $2.01 million, the report said. In schedules, Red Eagle reported $2.97 million in assets and $12.6 million in liabilities.
