Nature of the Case
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Facts
Cheerview owns a gas station and convenience store. Mohamad Berro, then a 26-year old individual who owned an oil change business, learned that the stock in Cheerview was for sale. Ali Damsaz, a shareholder in Cheerview, told Berro this was a good location and that Berro could basically run the business from his home if he kept the same employees. Berro purchased the stock and became the sole owner of Cheerview. SSB Bank held the first mortgage on the Property to secure two promissory notes made by Cheerview. U.S. Oil also held a mortgage on the Property to secure payment for the products that it purchased under the petroleum supply agreement. SSB Bank and U.S. Oil agreed between themselves that U.S. Oil's mortgage was subordinate to SSB Bank's mortgage up to $360,000.00. Berro formed Mikey's Fuel Mart, Inc. to operate the gas station and convenience store. Berro was an absentee owner. He also took Damsaz's advice and kept the existing Cheerview employees to run the business. At least one of those employees was stealing from the business. Berro fired the employees and filed a police report. Mikey's hired Hassan Ouza, a friend of Berro. Ouza had managed and worked in gas stations for over 15 years. They were unable to turn Cheerview's business around. The gas station had sold approximately 35,000 gallons of gas per month during 2016. Mikey's lost $75,428.00 on gross receipts of $1,056,341.00 in 2016. Mikey's shut down the operation of both the gas station and the convenience store. SSB Bank and U.S. Oil began foreclosure proceedings. Even though the value of the Property is far less than the mortgages on it, the Property is still considered to be a good location for a gas station and convenience store. SSB Bank sold Stockbridge all of its rights in and to the Cheerview mortgage debt on the Property. Cheerview filed Chapter 11 petition. The Third Amended Disclosure Statement and Plan states that Cheerview intends to now reopen the gas station and convenience store. Cheerview entered a Business Property Lease with Waverly Food Service, Inc. Waverly was formed by Ouza for the purpose of operating the gas station and convenience store. at the Property. Ouza is the president and sole owner. It provides for a monthly rent of $1,700.00. Cheerview entered into an agreement with RPF Oil Company, a gas supplier. RPF will provide gas to Cheerview and then pay Cheerview a 4% commission on any gas that Cheerview sells. Under this arrangement, RPF will determine the price at which Cheerview sells the gas, and RPF will also maintain the pumps and control all aspects of the sale of gas by Cheerview. Cheerview must sell a minimum of 70,000 gallons per month. The Projections in the plan are expressly based on the premise that Cheerview will sell 54,000 gallons of gas per month under the RPF Agreements. Ouza and Berro will both work full-time at the gas station and convenience store and they will have one part-time employee. The Projections assume net revenue of more than double the net revenue of Mikey's. The only party complaining about the adequacy of Cheerview's information is Stockbridge. Stockbridge bought the SSB Bank mortgage debt. Stockbridge made the purchase for the express purpose of foreclosing the mortgage to gain ownership of the Property so that Stockbridge can open its own gas station on the Property. Stockbridge and U.S. Oil argue that the Plan does not meet the requirement of §1129(a)(11). They showed that Cheerview would not be able to undercut its competitors and reach 70,000 gallons a month. The projections themselves showed only 54,000 gallons a month and assumed income and expenses that were to remain flat for 20 years.
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