Big River Contractors LLC got a court order allowing it to withdraw from bankruptcy eight days after it sought refuge from creditors by filing Chapter 11.
A company typically seeks bankruptcy protection to remain in business, but an oil field pipeline construction business that operates in the Eagle Ford Shale formation did the opposite so it could stay afloat.
Big River Contractors LLC, based in Cotulla, obtained a court order Friday allowing it to withdraw from bankruptcy eight days after it sought refuge from creditors by filing a Chapter 11 petition under a subchapter of the bankruptcy code designed for small-business debtors. The company outlined its reasons for wanting the case dismissed — chief among them that it blocked the use of a financing mechanism called factoring that Big River relies on — in a court filing ahead of Friday’s hearing in U.S. Bankruptcy Court in San Antonio. “If this case is not dismissed, Debtor has no way of paying its employees which will cause irreparable harm to the employees and effectively end Debtor’s operations,” it said. EATERIES’ WOES: El 7 Mares, Guillermo’s latest San Antonio restaurant operators to seek bankruptcy amid struggles The family-owned company — which started in 2018 and has more than 65 employees, according to its website — operates in the Eagle Ford, Permian Basin and other shale plays. It says it offers a wide range of services, including pipeline and facility construction, fabrication, engineering, maintenance and consulting. It listed a little more than $1 million in assets and about $1.8 million in liabilities in bankruptcy papers. Its revenue has fallen precipitously, from $8.1 million in 2022 to $5.3 million in 2023. This year, it had generated a profit of almost $40,000 on $759,284 in revenue before its bankruptcy filing. Factoring arrangement Big River disclosed that it has been factoring receivables through an “informal arrangement” with a factoring company called Top of the Town Marketing, also known as Crunch, and the company’s primary lender, Alliance Bank Central Texas. Factoring is a way for a business to quickly receive cash — as a percentage of an invoice to a customer — rather than wait for the customer to pay its bill. Under its factoring arrangement, Big River said, Crunch fronted the company 85% of an amount invoiced to a customer, which would send its payment directly to the bank. Once the customer paid, Crunch would pay the remaining amount to Big River, minus the factoring company’s fee its service. Crunch would withhold 1% if full payment was received within 30 days, 2% percent if received within 45 days or 3% percent for anything after 45 days. “Due to the filing of this bankruptcy case, factoring has ceased,” Big River said in a Wednesday court filing. Big River needed the factoring arrangement to continue so it could make payroll Friday, it said. However, that agreement was not put in writing. That prompted Chief U.S. Bankruptcy Judge Craig Gargotta to express concern about “the propriety of approving a factor agreement that was not reduced to writing.” A company that files for Chapter 11, which allows a debtor to reorganize its debts and pay creditors over time, must get court approval to dismiss its case. “One of things the court has to look at is whether or not, at this point in time, it’s better for the creditors to convert the case to Chapter 7 as opposed to dismissing the case, notwithstanding the fact that the court is sympathetic to the necessity of maintaining employees and paying wage claims,” Gargotta said. “So that’s why I had you go through this exercise” of filing the motion to dismiss the case. “It wasn’t just to provide you with a little heartache,” the judge said. Ray Battaglia, a San Antonio bankruptcy lawyer not involved in the case, described the motion to dismiss so early in the case as “unusual.” “What it smells like is there was a little bit of brinksmanship or bad communication,” he said. “Usually you tell , ‘Look, guys, if you don’t fund or to continue to fund, I’ll have no choice but to file bankruptcy or alternatively, the debtor’s dead if I don’t file bankruptcy.’ So usually that’s kind of an ultimatum that transpires before you get to the point of actually filing the bankruptcy. “And maybe that happened and maybe the creditor just said, ‘I don’t believe you.’ And then it happened, and someone blinked,” he added. “They said, ‘Well, we’ll factor.’ ” No opposition Filing the motion to dismiss gave Big River’s creditors an opportunity to oppose it at the hearing. None did. Steve Burton, an attorney for Alliance Bank, which has a lien on all of Big River’s assets, said that — to the extent it could — the bank would allow the company to receive funds so it could make payroll. “It is my understanding that the debtor and the factoring party have agreed that it if the case was dismissed, that the factor will resume and they will have the funds in their account to make payroll,” Burton told the judge. “So we’re going with that understanding.” The factoring company was identified as Top of the Town in the motion to dismiss. No one for the factoring company spoke during the hearing. Prior to its motion to dismiss, Big River had filed a motion for approval of a $150,000 sale of 15.5 acres its owns in Arkansas. The request became moot as a result of the bankruptcy’s dismissal. Joshua Gordon, a Houston attorney representing Big River, didn’t immediately respond to a request for comment. The judge granted the motion to dismiss “without prejudice,” meaning Big River can file for bankruptcy again.
El 7 Mares Big River Contractors LLC Crunch Alliance Bank Central Texas U.S. Bankruptcy Court Chapter 7 Craig Gargotta Big River Debtor Ray Battaglia Steve Burton Joshua Gordon Guillermo Big River Eagle Ford Shale Cotulla San Antonio Permian Basin Crunch U.S. Arkansas Houston Chapter 11 Top Of The Town Marketing
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Ford has big goals for software sales to small business truck fleetsFord CEO Jim Farley has urged investors to think of Ford Pro's bundle of software and vehicle sales, not Tesla, as the 'future of the automotive industry.'
Read more »
What Students Learn From Their Big Bear Bald Eagle (And Real Life) TeachersMariana Dale covers early childhood for the LAist and KPCC newsroom.
Read more »
Test Drive: Ford's Bronco Sport is big in heart, small in sizeWhile not as beefy and brawny as its more hardcore off-road brother, the Bronco Sport delivers respectable on-road manners and decent off-road performance in its own way.
Read more »
Test Drive: Ford's Bronco Sport is big in heart, small in sizeWhile not as beefy and brawny as its more hardcore off-road brother, the Bronco Sport delivers respectable on-road manners and decent off-road performance in its own way.
Read more »
First ride: Is new Ford Explorer a 'proper' Ford?We finally get a taste of Ford's bold new electric SUV as it goes on sale in Europe
Read more »
Monday's analyst calls: Ford set for strong gains ahead, big Nvidia price target hikeA major automaker and a key chipmaker were featured among Monday's biggest analyst calls.
Read more »