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BFCA
BFCA, Benesch, Friedlander, Coplan & Aronoff, were hired in November, 2001, to evaluate the advisability of a Chapter 11 proceeding for Level Propane. Level was at an impasse with the Bank Group, which was pressuring it to sell out its home-heat business and get out of the industry. The lead contact for this engagement was Mark Schlachet. When, in January, 2002, serious offers were presented, Mr. Schlachet was pushed aside in favor of the Merger and Acquisition Practice, headed by James Hill. Terms of a sale to Star Gas were initialed in February, 2002. The Star Gas sale was permitted to languish, for at the same time BFCA was negotiating with the Bank Group the terms of a Forbearance Agreement, which required that John Rudd of Newmarket Partners manage the business as Chief Restructuring Officer until the business was sold to Parthenon Capital, which had made a competing offer.
The Forbearance Agreement was signed on March 7, 2002, at which point John Rudd took command of Level Propane. BFCA, called by Judge Aldrich of United States District Court, Northern District of Ohio, “officers of the Court, representing the Bank Group,” racked up tremendous fees during Rudd’s tenure. They delivered their billing weekly by fax to Rudd, who paid them by wire out of Level funds. By the end of May, 2002, the sale to Star Gas had been frustrated and Parthenon had dropped its offer from $147 MM to $27MM, which was less than the customer tanks were worth. At that point Rudd announced his resignation effective June 3, 2002. William Maloof, the founder and CEO, attempted to pick up the reins, beginning to sell pre-buys of propane. BFCA warned him that Level should not sell pre-buys because, as an insolvent enterprise, it could guarantee that it would be able to deliver the propane so purchased. On June 5, 2002, Maloof asked for the Chapter 11 petition BFCA prepared, BFCA failed to deliver the papers.
On June 6, 2002, BFCA resigned, on the pretext of the pre-buy dispute. That same day, the Bank Group took the voting rights of Level and elected Charles Sweet Sole Director and simultaneously filed an involuntary Chapter 7 liquidation petition. On June 7, 2002, the Bank Group, through Sweet, hired BFCA as Debtors’ Counsel. On June 11, 2002, the Chapter 7 proceedings were converted to a Chapter 11 Proceeding by stipulation. Maloof signed the stipulation, which provided that BFCA would be only transitional counsel. Nonetheless, BFCA applied for appointment as permanent counsel, and were appointed by the Court on September 23, 2002, the day of the failed auction.
BFCA has since presided over sale of the going concern assets to Horizon Propane for $24 MM, less even than the rejected Parthenon offer, and the ultimate disposition to Amerigas.
See links to Motion to Disqualify Debtor’s Counsel, Examiner’s Report at 71-77.
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