Metro Fuel Oil creditor group looks to file plan to move cases forward

By Caroline Salls

Pittsburgh, Oct. 17 - Metro Fuel Oil Corp.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Eastern District of New York to modify the company's Chapter 11 plan exclusivity rights to grant the committee co-exclusivity, according to an Oct. 17 court filing.

The committee said it is critical for it to be allowed to file a plan of liquidation to move these cases forward and avoid the "devastating consequences" to all creditors that would ensue if secured lender New York Commercial Bank's (NYCB) motion to convert Metro Fuel's bankruptcy case is granted before plan confirmation can be sought.

The creditor group said its plan lays a path for resolving multiple complex litigation disputes that have stalled Metro Fuel's cases for months and resolves the involuntary Chapter 11 cases of Paul J. Pullo Jr. and Gene V. Pullo.

In addition, the committee said its plan "presents the only opportunity for unsecured creditors to receive a distribution in these cases in a reasonable timeframe."

Without the plan, the committee said the cases will likely be converted, paving the way for the dismissal of the Pullos' involuntary cases and rendering NYCB's judgment lien against the Pullos' assets unavoidable.

If that happens, the committee said "all chances of recovery for the other secured creditors that hold personal guarantees by the Pullos and all unsecured creditors of the debtors will be pointlessly excluded from the approximately $18 million to $24 million that the Pullos are expected to contribute under the committee's plan."

According to the motion, the Metro Fuel debtors are not currently in a position to adopt and sponsor the committee's proposed plan or any other confirmable plan.

"The debtors' inability to file a plan now should not effectively mean the death knell of these estates and a windfall for NYCB," the committee said.

As previously reported, the committee sought the involuntary bankruptcy of the Pullos in June as a way to prevent NYCB's $16.87 million state court judgment from superseding the creditors' claims.

At that time, the committee said NYCB's judgment liens against the Pullos' assets would become unavoidable if the Pullos did not voluntarily or involuntarily obtain bankruptcy protection before June 13.

If that happened, the committee said NYCB would be a secured creditor of the Pullos, and all other holders of unsecured guaranty, contract, tort and avoidance claims against the Pullos would not receive any recovery until New York Commercial Bank was paid from the Pullos' assets.

Involuntary bankruptcy cases were filed against the Pullos on June 12 by the committee and three other petitioning creditors.

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, 2012 under Chapter 11 case number 12-46913.

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