Operations are continuing as usual at Flying J complexes nationwide, despite the company’s Chapter 11 bankruptcy filing on Dec. 22.
Flying J and its Big West refining and Longhorn Pipeline subsidiaries filed voluntary Chapter 11 bankruptcy papers with the U.S. Bankruptcy Court in Wilmington, Del. The filing does not affect other business units or affiliates, the company said, nor does it affect Flying J’s Canadian operations.
According to information from Flying J Inc., the “operations remain open and are conducting business as usual.”
“We’re very optimistic about the restructuring,” Flying J’s director of marketing, Virginia Parker, said on Friday.
Flying J operates approximately 250 travel plazas and fuel stations nationally, employs more than 16,000 people in the U.S. and Canada, and is among the 20 largest private companies in America. Its sales in 2007 exceeded $16 billion, according to a news release from the company.
Flying J President and Chief Executive Officer J. Phillip Adams pointed to a sudden drop in oil prices and a lack of available traditional financing as the source of its financial problems.
“Even though Flying J today is a successful and historically profitable company, it faced near-term liquidity pressure from an unprecedented combination of factors,” Adams said in a news release. “... With this sudden and unanticipated inability to meet our liquidity needs, we regret that we had no other choice than a Chapter 11 filing to enable us to stabilize our financial base.”
Adams added that the company has valuable assets and remains optimistic that “we will be able to generate substantial cash internally to allow us to meet our obligations going forward.”
Company representatives expect the bankruptcy restructuring to be completed within months, rather than in years, as often happens when businesses file for Chapter 11 reorganization.
Adams does not anticipate any layoffs as a result of the filings. The company plans to continue paying its associates in the usual manner, without disruption to their medical, dental, life insurance, disability or other benefits.
Suppliers who provided goods and services after the Dec. 22 filing will be paid under normal terms, according to a Flying J news release.
Those who provided goods or services prior to the filing may have “pre-petition claims.” Those claims are frozen and cannot be paid without specific authorization from the bankruptcy court. Those suppliers and vendors will receive additional information later from the company’s claims agent, the release stated.
The company listed 30 creditors to which it owed millions, ranging from $2,131,338, to Tanner Companies Inc., (address not available on court documents) to $85,817,705.31, to Zion Bank of West Valley City, Utah.
Among the other major debts were $69,447,149.65 owed to Conoco Philips of Houston, $26,088,709.30 to Berry Petroleum of Denver, $19,137,323.16 to Houston Refining of Houston, and $17,457,498.34 to BP & Oil Co. of Atlanta. Conoco and BP each were listed as having a claim that “may be disputed or set off.”
The remainder of the debts each were less than $12 million.
An article in the Dec. 23, 2008, “Wall Street Journal” Flying J is one of the first energy-sector companies to file for bankruptcy.
“But if the economy continues to slump and credit remains tight, more companies, particularly those burdened with big dewbts, could file for bankruptcy,” WSJ reported.
WSJ also reported that many of Flying J’s loans were secured with oil and refined product inventories. When oil prices plummeted more than 70 percent, the value of the loan collateral was lowered accordingly, triggering additional payments — margin calls — that caused the company to default on a $200 million loan provided by a group of lenders led by Bank of America.
The following day, Flying J’s distribution subsidiary defaulted on a $120 million loan provided by a group of lenders led by Merrill Lynch Capital Corp.
“Mr. Adams said that although Flying J has profitable assets, it was unable to sell them or secure other sources of credit in time to avoid the defaults,” WSJ reported.
Flying J has posted in-depth information — including frequently asked questions for customers, vendors and suppliers, as well as traditional customers — on its Web site at http://www.flyingj.com.
Companies with claims against Flying J may get a claim form online or may call the company’s accounts payable department at 877-487-8559.
A FAQ section on the Web site stated that the company will continue to honor all of its Flying J fuel cards and its rebate programs.
Customers who have questions about Frequent Fueler, RV Real Value, Rewards and TOURewards loyalty cards may call (877) 787-3595.
Trucking or commercial customers may call (801) 624-1173.
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ginantom (anonymous) says...
thats all fine and good for the j. phillip adams of the world but what about the employees and former employees who had/have stock that is now worthless and was a large amount of their retirement. i have one word..screwed. thanks flying j
January 21, 2009 at 3:53 a.m. ( permalink | suggest removal )