PORTLAND — The former president of M.W. Sewall & Co. was the top bidder in an auction for assets of the Bath fuel company last week.
Edward “Ned” Sewall III, president of M.W. Sewall from 1995 to 2007, offered about $4.7 million on April 6 for the home heating oil operations of his family’s company. His bid included $2.69 million that he says the company owes him after a buyout by his brothers, Philip and Mark, in 2007.
A hearing to confirm the sale was held April 9 at U.S. Bankruptcy Court in Portland.
“Needless to say, it’s been quite a roller coaster,” Sewall said following the hearing. “As hard as all the negotiations were, the professionalism from the (bankruptcy) trustee (and) the attorneys got us really to close a huge gap and hopefully have us move on.”
Sewall said that after his parents died a few years ago, “it’s been a roller-coaster ride of epic proportions.”
The company, which has served the Mid-Coast since 1887 and runs the Clipper Mart chain of convenience stores, filed for bankruptcy protection in March 2009. A Chapter 11 trustee was appointed to run the company last October after Stephen G. Morrell of the Office of the U.S. Trustee described the company as plagued by internal disputes, spiraling financial losses, questionable business judgments and management conflicts of interest.
Bankruptcy Trustee Mark Stickney, who has essentially functioned as chairman and chief executive of M.W. Sewall, fired Philip Sewall on Feb. 5. According to court documents, Stickney alleged that Sewall misappropriated the company’s property, “including confidential information, proprietary information, and trade secrets, and soliciting the (company’s) employees to switch their affiliations from the (company) to Mr. Sewall’s proposed new enterprise ‘Sewall Energy.’”
U.S. Bankruptcy Court Judge James Haines signed off on the temporary restraining order, which was entered with the consent of Stickney and Sewall. However, Stickney’s attorney, Gayle Allen, pointed out that Sewall had not admitted or conceded any of the allegations against him in the complaint or motion.
M.W. Sewall cited the poor economic climate as its reason for seeking protection against its creditors last year. The company lost more than $563,000 in 2007 and was expected to show a net loss of almost $1.8 million for 2008.
Morrell wrote last October that in 2005 Mark, Philip and Ned Sewall entered into agreements that brought the business interests of Mark and Philip under the company’s “corporate umbrella.” Morrell stated that Mark and Philip Sewall threatened litigation in 2007 over Ned’s continued employment, and that a settlement agreement was reached that July to end Ned’s employment in exchange for $2 million in cash and a $2.5 million note.
Five qualified bidders participated in the April 6 auction. Along with Ned Sewall, bids were submitted by Downeast Energy Corp., Energy North, Energy USA Propane and TD Bank. Stickney determined Downeast to have the second best bid with an offer of $2.25 million, plus the value of some accounts receivable and inventory. According to the bidding procedures, if Sewall fails to close on the purchase, Downeast will have an opportunity to buy the company.
An auction of M.W. Sewall’s chain of convenience stores is scheduled for April 20.
Sewall said he had spent nearly 40 years with the company, starting to work there when he was 12. He said he is not yet sure if he will become the company’s president again.
He said he would probably not bid on the convenience stores.
“We were a good … company,” Sewall said. “… We won’t be the first or the last group to go down this road.”
He said that going forward, he is happy to put the issues that have plagued the company behind him.
“You’d just like to get on with your life, and that’s what I look forward to at this point,” Sewall said.
Alex Lear can be reached at 373-9060 ext. 113 or email@example.com.