Metro Fuel Oil Co., a closely held provider of heating oil, construction site fueling and central air conditioning, filed for bankruptcy with a proposed investment from the real-estate billionaire Sam Zell and a plan to sell the company in 90 days.
A Chapter 11 petition filed today in Brooklyn, New York, where the company is based, listed as much as $50 million in assets and $100 million in debt. Kirkland & Ellis LLP is the company’s bankruptcy counsel.
David Johnston, a managing director at the company’s financial adviser, AlixPartners LLP, the company’s proposed chief restructuring officer, said in a court filing that it seeks to borrow $10 million to fund operations in bankruptcy.
A “liquidity squeeze” brought on the bankruptcy filing, and a sale of all of the company’s access is planned within 90 days, Johnston said in court papers.
Prior to the bankruptcy, Metro Fuel Oil’s outstanding long-term secured debt was about $58.8 million, consisting of $48.3 million of bank debt and $10.5 million of project financing related to a new biodiesel plant. The company also estimates its trade creditors have claims or around $10 million, according to the filing.
The bankruptcy petition included nine other units and listed its largest unsecured creditors as Bayside Fuel Oil Depot Corp. and Ameranda Hess Corp.
The proposed $10 million loan will be provided by Third Avenue Management LLC’s special situations fund and Zell’s Zell Credit Opportunities Master Fund LP, according to court papers. The loan is tied to the planned bankruptcy sale.
The billionaire was said in July to be seeking $1 billion for his Equity Group Investments LLC’s next distressed private-equity fund. Two people familiar with the matter told Bloomberg News at the time that the new fund would make investments including asset acquisitions, secondary-market purchases and give rescue capital to cash-strapped companies.
Equity Group’s first fund owns a stake in Texas utility Energy Future Holdings Corp., the people also told Bloomberg News. The company, formerly known as TXU Corp., was taken private by KKR & Co. and TPG Capital for $43.2 billion in 2007, the biggest leveraged buyout in history.
Other investments of the first fund include Blockbuster LLC, Domino’s Pizza Inc., Hilton Hotels Holdings Corp. and Marriott International Inc.
The case is In re Metro Fuel Oil Corp., 1:12-46913, U.S. Bankruptcy Court, Eastern District of New York (Brooklyn).