BATH — An attorney for M.W. Sewall & Co. this week said the company, which filed for Chapter 11 bankruptcy protection on March 27, could be back on its feet in as little as six months.
While the length of time needed for companies to work their way out of bankruptcy varies, attorney George Marcus said, the process usually takes between six months and a year.
“I expect that’s an appropriate time frame for this case,” he added.
Chapter 11 is the most common form of bankruptcy, freeing a company from the threat of creditors’ lawsuits while it reorganizes its finances. The debtor must obtain new financing and develop a reorganization plan that is accepted by a majority of its creditors and a bankruptcy court judge. Unless the court rules otherwise, the company remains in control of its business and assets.
Historically, however, most companies that seek Chapter 11 never emerge from the court’s protection and are forced to sell or liquidate. And because of the current credit crisis and its impact on the ability of debtors to obtain new financing, there is even more pressure now on companies that seek Chapter 11 protection.
Sewall, a family-owned heating oil company that has served Mid-Coast communities since 1887 and also operates the Clipper Mart chain of convenience stores, cited the current economic climate as the reason it is seeking protection from its creditors.
Marcus, however, said no store closings, layoffs or significant changes in services are expected during the bankruptcy reorganization.
Filing for Chapter 11, he explained, “basically freezes past-due debt and allows (Sewall) to operate going forward just by paying their regular expenses in the ordinary course while they get the time to restructure their finances.”
Not only does the bankruptcy allow Sewall to reorganize, according to a statement released March 27, but its 150 employees will be able to keep their jobs and all contracts with existing customers can be honored.
“Although we had an option of selling, we decided we owed it to our employees, customers and a long family history to keep the business going,” company President Philip Sewall said in a prepared statement. “If we had sold the company, it would have meant job losses for over half of our 150 employees and service interruption for our customers. We are committed to our employees and to continuing service, without interruption, to our customers.”
Along with delivering heating oil and propane and providing sales and service on propane and oil heating systems, the company operates 11 convenience stores and several car washes.
“They’ve been a great company to work with over the years, and we’re hopeful that they’ll come out of this successfully,” Bath City Manager Bill Giroux said.
According to documents filed at U.S. Bankruptcy Court in Portland, Sewall’s estimated assets and liabilities are both between $10 million and $50 million.
Citgo Petroleum is the company’s largest unsecured creditor, owed $1.2 million. Pine Street Trading Co. of Augusta is second-largest, with a claim of about $282,000. Central Maine Power Co. is owed about $35,000, Oakhurst Dairy nearly $23,000, and Airtemp Mechanical Contractors of South Portland about $13,000.
Marcus said a list of secured claims will likely be available in about 30 days.