Delco Forced into Chapter 7
Published in CSP Daily News
Jobber's reorganization effort thwarted by bank's bankruptcy complaint
DE LAND, Fla. -- It appears a prominent jobber in Florida will be forced from his efforts to reorganize his business through Chapter 11 bankruptcy proceedings into Chapter 7, which would require the liquidation of the company.
A month after Stephen DeLuca filed a Chapter 11 bankruptcy petition in October for his Delco Oil Inc. company, creditor CapitalSource Finance LLC (CSF) challenged the intent of the bankruptcy and claimed Delco was paying its bills with CSF funds it should not have been accessing. As a result, a judge ruled on November 22 that Delco [image-nocss] has no authority to utilize CapitalSource's cash collateral and ordered the company to convert its filing to Chapter 7 status by December 1.
In its complaint, filed November 14, CSF claimed, Delco has continued to burn through CapitalSource's collateral in contravention on the bankruptcy code and this court's directives. According to court documents, Delco paid bills totaling more than $3 million in the three weeks following the bankruptcy petition filing, most of it to oil companies, including Marathon Petroleum Co., Rozier Oil Co. and Whitaker Oil Co.
U.S. bankruptcy judge Paul Glenn agreed with CSF, noting in an injunction that CSF would sustain irreparable harm if Delco continued to use its cash, which was secured via a revolving credit agreement reached in April 2006. Delco [is] enjoined from using, diverting, disposing, converting or otherwise taking any action with respect to CapitalSource's cash collateral other than depositing all collected funds into Delco's account at MainStreet Community Bank of Florida, Glenn wrote.
DeLuca, president of De Land, Fla.-based Delco, filed for bankruptcy protection for the company on October 17, claiming between $1 million and $100 million in both estimated assets and estimated liabilities, and between 200 and 999 creditors.
Delco is a full-service fuel and lubricant supplier to the central Florida market. It markets Sunoco, 76 and Phillips product, according to the company Web site.
DeLuca founded Delco Oil in 1983 with a top priority of commitment to all customers by providing the highest quality products and service, according to the Web site. Over the past 12 months, the company has opened six bulk plants in Dade City, East Palatka, Eustis, Gainesville, Lake City and Ocala, Fla., the Web site said.