Flying J Inc. and its Big West refining and Longhorn Pipeline subsidiaries filed for Chapter 11 bankruptcy protection on Monday. The company said the filing will allow it to address near-term liquidity needs due to the steep decline in oil prices and the disruption in credit markets.
Flying J stressed that all operations, including its approximately 250 travel plazas and fuel stops, will remain open as the company plans to continue normal business operations as it moves through the reorganization process. The company added that its fuel cards and other programs for truckers will not be affected by bankruptcy protection.
Under the terms of Chapter 11, any suppliers that provided goods or services to the Flying J entities involved in the protection have “pre-petition claims” that are frozen and cannot be paid without specific authorization from the Bankruptcy Court. Once the Court confirms the procedures and deadlines for filing claims, vendors and suppliers will receive a proof-of-claim form and instructions on how to file the form with the company, Flying J said.
According to the company, any goods received or services provided before the Chapter 11 filing are considered to be “pre-petition,” while goods received or services provided after the filing is “post-petition.” The date that determines which category the transaction is categorized as is when the company assumed ownership of the goods or the service was rendered to the company, not the invoice date or the moment the goods arrived on premises.
Flying J said no other subsidiaries, affiliates, or any of its Canadian operations were included in the filing or are subject to the reorganization proceedings, and outstanding invoices from these entities will be paid in the normal course. The company added that it has enough in assets and incoming money to continue funding normal operations.
“Even though Flying J today is a successful and historically profitable company, it faced near-term liquidity pressure from an unprecedented combination of factors: the precipitous drop in the price of oil and the lack of available financing from our traditional sources due to disrupted credit markets,” said J. Phillip Adams, Flying J president & CEO. “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.
“The good news is we have valuable assets, we do not expect layoffs will be necessary, and we are optimistic we will be able to generate substantial cash internally to allow us to meet our obligations going forward,” Adams added. “Our objective is to move through this process as quickly as possible and to work toward a solution that will address our short-term liquidity needs and allow us to meet our past obligations in full. In the meantime, our team is focused on continuing business as usual.”
