Monthly Archives: May 2013
By: Katie Imler, Law Clerk
On May 21, 2013, Cooper-Booth Management Company, Inc. a full-line, full-service wholesale distributor for retailers and convenience stores, filed for a voluntary Chapter 11 bankruptcy in the Eastern District of Pennsylvania (Case No. 2:13-bk-14522). The company began in 1865 as Booth Tobacco Company in Lancaster, Pennsylvania. Being family owned and operated for three generations, Cooper-Booth has been recognized as one of the Top 20 leading convenience store wholesales in the country. Murton Margolis is Emeritus and Barry Margolis is President.
Cooper-Booth, located at 200 Lincoln West Drive, Mountville, PA 17554 listed assets of $500,000-$1 million and liabilities of $10-$50 million, enumerating over 200 creditors . See summary of the docket here. Schedules are due June 4, 2013. The Debtor is represented by Aris J. Karalis and Robert W. Seitzer of Maschmeyer Karalis P.C., 1900 Spruce Street, Philadelphia, PA 19103. Cooper-Booth’s largest creditors include Maryland Comptroller of the Treasury-Alcohol & Tobacco Tax ($7,438,500.00), PA Department of Revenue ($3,330,768.00), New York State Department of Tax & Finance Division of Treasury ($3,140,324.74), Delaware Division of Revenue ($1,563,285.93).
The federal government has frozen the Debtor’s bank accounts while an investigation is pending to determine if one of the Debtor’s customers has been illegally smuggling untaxed cigarettes into New York. Basel Ramadan and his brother, Samer Ramadan, bought cigarettes from the Debtor Cooper Booth Wholesale Inc. using business fronts in Virginia allowing them to pay the $0.30/pack Virginia cigarette tax instead of the $4.35/pack cigarette tax in New York.
The two moved 20,000 cigarettes a week to the New York City area without paying the New York taxes, which cost the state approximately $80 million in taxes. See more on the story here.
The Debtor’s case was initially assigned to the Honorable Judge Eric L. Frank, but was reassigned to the Honorable Judge Magdeline D. Coleman. On May 22, 2013 Judge Coleman issued an order demanding timely filing of all Schedules. Judge Coleman also entered an order directing the joint administration of Debtors’ Chapter 11 Cases 13-14522 and 13-14521 pursuant to Bankruptcy Code § 1015(b), determining 13-14519 as the lead case. The Debtor’s second voluntary Chapter 11 bankruptcy was for Cooper-Booth Transportation Company, LP (Case No. 2:13-bk-14521), which listed $1-$10 million in both assets and liabilities. Most of the liabilities are for state and federal taxes.
On May 2, 2013, River Cities Glass & Construction, LLC, a glass and glazing contractors company, located at 4750 Winchester Avenue, Ashland, KY 41101 filed a voluntary Chapter 11 bankruptcy protection in the Southern District of West Virginia (Huntington), assigned case No. 3:13-bk-30226 (RGP). The case was assigned to the Honorable Judge Ronald G. Pearson. See docket here. William Cox signed the Debtor’s Schedules as President of the Debtor.
The Debtor is represented by Mitchell Lee Klein of the Klein Law Office, 3566 Teays Valley Road, Hurricane, WV 25526. Klein’s disclosed a retainer of $5,000 and an hourly rate of $200/hour.
The Debtor elected to be considered a “small business debtor” pursuant to Bankruptcy Code Section 1116. Its Chapter 11 Plan is due in 6 months, or by October 29, 2013. Its Disclosure Statement is also due on October 29, 2013. The Debtor listed liabilities of $159,936.01 and assets under $50,000 with less than 50 creditors. Simultaneously with its voluntary petition, the Debtor filed an initial operating report and an application to employ an attorney. Because this is a “small debtor case”, in addition to filing a petition, schedules and a statement of financial affairs, the Debtor is required to also submit a balance sheet, statement of operation, and a cash flow statement, as well as a federal tax return.
New Bankruptcy Code Section 1116 imposes duties on a small business debtor beyond not required of other Chapter 11 debtors, beginning with the filing of the petition. Under § 1116(1), the debtor must attach to its petition (or in an involuntary case, file within seven days after the date of the order for relief) either (a) its most recent balance sheet, statement of operations, cash flow statement and federal income tax return or (b) a statement made under oath that such documents have not been prepared and that such tax return has not been filed.
We found this listing on the salespider website for the Debtor; we are not certain when it was ever initially listed. The listing stated that the company has about 7 employees and estimated yearly revenue of $1,200,000 and that the Debtor’s SIC Code is 5231. This industry consists of establishments engaged in selling primarily paint, glass, and wallpaper, or any combination of these lines, to the general public. While these establishments may sell primarily to construction contractors, they are known as retail in the trade. Establishments that do not sell to the general public or are known in the trade as wholesale are classified in the wholesale trade industries. See SIC Code article here.
On April 23, 2013, Debtor Mike’s Open Face Breakfast, Inc. of 107 W. Chelten Avenue, Philadelphia, PA 19144 filed a Chapter 11 bankruptcy petition in the Bankruptcy Court for the Eastern District of Pennsylvania (Philadelphia), Case No. 13-13583-elf. Debtor’s counsel is Hae Yeon Baik, of Baik & Associates, PC, 2333 Fairmount Avenue,1st Floor Left, Philadelphia, PA 19130. The case has been assigned to Honorable Chief Judge Eric L. Frank. The Debtor’s assets are less than $50,000 and the liabilities are less than $50,000. The Debtor has yet to file a full set of schedules and a statement of financial affairs. The Debtor will have 15 days from the Petition Date in which to do so, unless the Debtor’s counsel seeks and extension of such a deadline.
A summary of the docket for this Chapter 11 can be viewed here.
Mike’s Open Face Breakfast operates as a breakfast and lunch spot in the Germantown area of Philadelphia, just outside of one of my old stomping grounds Chestnut Hill, Pennsylvania (got my first post-law school apartment there).
Notably, Mike’s Open Face Breakfast filed as a “small business debtor case” filed by a “small business debtor”. Pursuant to Bankruptcy Code 101, in order to be a “small business debtor”, a debtor must have aggregate noncontingent liquidated, secured and unsecured debts as of the date of the petition in an amount not more than $2,190,000 (excluding debts owed to 1 or more affiliates or insiders). 11 U.S.C. ss 101(51D). The debtor must be engaged in commercial or business activities (other than primarily owning or operating real property). Also, the case must be one in which a U.S. trustee has not appointed a creditors’ committee, or the court has determined that the creditors’ committee is insufficiently active and representative to provide oversight of the debtor. 11 U.S.C. ss 101(51D).
What is the impact of the “small business debtor case” designation? The most obvious benefit is that typically the case proceeds more quickly, but at that same time the debtor is subjected to more U.S. trustee oversight and is required to comply with more procedural filing requirements. For a great article re: “small business debtor cases”, click here.