Metro Fuel creditor objects to request for exclusive period extension

By Jim Witters

Wilmington, Del., Jan. 18 - A Metro Fuel Oil Corp. creditor has objected to the company's request for a 90-day extension of its exclusive periods for filing a Chapter 11 plan and for soliciting plan acceptances, according to documents filed Friday with the U.S. Bankruptcy Court for the Eastern District of New York.

New York Commercial Bank, a secured creditor with claims of more than $41 million says the court "should deny the motion or, in the alternative, extend exclusivity no more than thirty days or simply permit exclusivity to lapse as to NYCB."

If the Metro Fuel Oil request is granted, the exclusive period for filing a Chapter 11 plan would be extended to April 25 from Jan. 25. The exclusive period for soliciting plan acceptances would be extended to June 24 from March 26.

The bank says that Metro's own statements reveal why the court should deny an extension.

The debtors have scheduled a Jan. 25 auction for substantially all of their assets.

"The debtors admit that they will soon have little cash and little inventory, so any sale resulting from the auction would need to close very soon thereafter. Thus, if the debtors' impending auction sale occurs, no 'cause' exists to extend exclusively simply to liquidate and distribute proceeds," the objection states.

The bank also argues that, should a sale fail to occur, the court should deny extension of the debtors' exclusivity, "because the debtors' announced sale of assets will have utterly failed, and they will have virtually no cash or inventory to continue operating in any case."

If Metro continued to operate with so little cash and inventory, the bank's collateral would erode, the objection says.

The debtors' $11.6 million debtor-in-possession financing facility matures on Feb. 9.

"This looming obligation further constrains the debtors to complete a sale of their assets in the very near term," the bank says.

"The debtors argue that they merit an exclusivity extension because they do not yet know the amount of consideration that any sale would achieve, so they cannot gauge what sort of Chapter 11 plan they might seek to confirm. However, given the short time frame for the necessary completion of the sale, the extension request is unnecessary, and certainly unnecessarily long, because the debtors will soon know exactly whether a sale closes and what kind and amount of consideration they have," according to the bank's objection.

And, because Metro plans to sell substantially all of its assets at the auction, any resulting plan would necessarily be a plan of liquidation, not reorganization, the bank says.

A hearing on the request is scheduled for 11 a.m. ET on Jan. 24.

Metro Fuel is a Brooklyn, N.Y.-based energy company that supplies bioheat, biodiesel, heating oil, central air conditioning units, ultra-low sulfur diesel fuel, natural gas and gasoline throughout the New York City metropolitan area and Long Island. The company filed for bankruptcy on Sept. 27 under Chapter 11 case number 12-46913.

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