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The Bank Group
The Bank Group comprised of Deutsche Bank, Provident Bank (now PNC Bank through National City) and LaSalle Bank, N.A. (now ABM Ambro). In 1999, National City urged Level Propane to either sell its home heat business or obtain a credit facility with another bank. After some search, a deal was signed with Deutsche Bank in November, 1999. BT Commercial Corp., a wholly owned subsidiary of Deutsche Bank was the Bank Group Agent, who acted as the contact for all the Banks in their dealings with Level Propane.
As best as we can determine, Deutsche Bank saw Level Propane’s business model as hostile to the petroleum refining industry, because it was centralized and depended on the Texas Eastern Pipeline for its product, HD5 propane, rather than purchasing byproduct directly from the Northern refineries. The sale of byproduct to market as home heat fuel created an additional profit center for the refineries, while providing the marketers who purchased the product inexpensive fuel to sell at full retail prices. The product was of variable quality, however, and often burned fast and cool. The product marketed by Level, of consistent quality and competitive price, challenged the dominance of the other marketers, and the profitability of both these marketers and the refineries that sold them this byproduct.
BT Commercial, headed by Wayne Hillock, formerly of Bankers’ Trust, of which BT Commercial was the successor, imposed stringent terms on the credit facility and seized on any pretext to threaten a default. Finally, in February, 2002, it extracted an onerous Forbearance Agreement from Level Propane, then represented by BFCA, that was executed on March 7, 2002. Because a sale of the home heat business to Star Gas that would satisfy the indebtedness was pending, the CEO of Level acted to preserve the sale and his equity. The Bank Group, however, through BFCA, stalled the Star Gas sale, while installing John Rudd to prepare the company for a takeover by involuntary bankruptcy. Rudd resigned effective June 3, 2002. The Bank Group filed an Involuntary Chapter 7 Bankruptcy Petition on June 6, 2002, the same day it seized the shares and installed Charles Sweet as sole Director and the same day that BFCA withdrew as counsel for Level Propane.
In the course of the first months of the bankruptcy, the Bank Group secured its complete control over the going concern: it obtained an Agreed Conversion Order, by which the appointment of a trustee was avoided and its hand-picked CEO, Steven Sues, could run the debtor in possession. When it invited the Jacobs Group as manager, Steven Sues worked hand in glove with the Jacobs team, while John Rudd monitored the company on behalf of the Bank Group. It frustrated the September 23, 2002 auction by eliminating a stalking-horse bidder and seeing to it that the bid deposits were not made on time. It directed, through its agents, the going concern to Eaglerock Propane, the company owned by the Jacobs Group to manage Level Propane, even paying part of the fee for the BV Module to John Verbos. It then saw to it that the going concern assets were turned over to Amerigas.
Why Level Propane
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