July 27: Bison Forecasts $2.2M Negative Cash Flow Thru October
July 1: Bankruptcy Judge Grants Bison's Initial Ch. 11 Requests
June 30: Bison Cites Housing Slump, Credit Squeeze for Going Into Chapter 11
June 29: Bison Building Materials Files for Chapter 11
Bison Building Materials has asked a U.S. Bankruptcy Court in Houston to reject 10 leases that it maintains helped cause the financial distress that led it to file for Chapter 11. Judge Wesley Steen is scheduled to hear the company's request on Aug. 10.
Three of the leases are in Houston and two are in the Denver suburb of Aurora, Colo., while the others are in San Antonio; Irving, Texas; Albuquerque, N.M.; Las Vegas, Nev.; and Monroe, Ohio.
In its motion, filed Wednesday, attorneys for Bison said the Houston-based LBM dealer--the 14th biggest in America, according to the 2009 ProSales 100ydusvvzf--began to expand along the Interstate 35 corridor in 2005 and then into Nevada, Arizona, Colorado, Ohio and New Mexico "to take advantage of perceived opportunities in those areas."
"However, when the housing downturn occurred, the Debtors instituted a downsizing program and retrenched to its core Texas business" in metro Houston, the motion continued. But even after it left the other markets, it still had to make lease payments on the locations that it closed.
Bison noted in Wednesday's motion that in some cases it had obtained subleases for some of the properties and it is "continuing to negotiate with the various landlords regarding the transition of the leases to new tenants, as well as other means of mitigating rejection damage claims against the Debtors' estates."
However, a declaration filed to the same court in late June by Bison president Pat Bierschwale said that, "Since most of the Debtors discontinued operations are in markets such as Las Vegas and Phoenix, some of the most toxic real estate markets in the United States, the Debtors' effort to sublease premises or otherwise mitigate damages of landlords have been largely unsuccessful,. The Debtors are now being sued in multiple locations throughout the United States by former landlords."
In May, the statement added later, "management decided it was not possible to continue to pay the lease rentals attributable to the discontinued operations and ceased making those payments." The Las Vegas lease isn't scheduled to expire until 2020, while one of the leases in Aurora runs to 2015.
Bison recorded a loss of $16.1 million in $214 million in revenue during the fiscal year ended last April 30. It forecasts it will accumulate a negative net cash flow through Halloween reaching $2.2 million as it seeks to reorganize and emerge from Chapter 11.