Dive Brief:
- Blue Owl Capital and one of its top executives have agreed to pay $15 million to settle accusations of wrongdoing in the Mountain Express Oil bankruptcy, according to a Jan. 30 motion filed with the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
- Blue Owl, through its real estate arm Oak Street Capital, was Mountain Express’ largest landlord before the retailer collapsed in 2023 amid financial turmoil. Last summer, lawyers representing Mountain Express’ bankruptcy trustee accused Blue Owl and Jared Sheiker — the firm’s principal and chief of staff — of breaching their fiduciary duties, aiding and abetting breach of fiduciary duty, civil conspiracy and fraudulent transfers, among other actions.
- Although Blue Owl and Sheiker have denied any wrongdoing, both parties have agreed to pay the trustee $15 million to settle all past and present claims from Mountain Express’ bankruptcy, pending approval by the court.
Dive Insight:
Blue Owl’s relationship with Mountain Express dates back to 2021, when the Georgia-based retailer was in the midst of a rapid growth phase. That summer, Oak Street agreed to finance up to $1 billion worth of Mountain Express’ acquisitions of c-stores and travel centers via sale-leasebacks. As part of this agreement, Sheiker was appointed to Mountain Express’ board of directors.
Over more than a year, Oak Street funded Mountain Express’ acquisitions of 286 properties across 60 sale-leaseback deals, totalling more than $825 million.
After Mountain Express terminated operations in late 2023 following years of mismanagement, its trustee’s lawyers said Blue Owl and Sheiker contributed to the retailer’s financial mishandlings. Last summer, these attorneys demanded Blue Owl, Sheiker and Mountain Express’ former co-CEOs — Lamar Frady and Turjo Wadud — pay a minimum of $250 million in damages.
Blue Owl and Sheiker have now agreed to settle with the trustee to finally leave this case behind. Although there is no update regarding Frady and Wadud, the settlement notes that if the trustee obtains any recovery from them or any separate entity they owned, Blue Owl will receive 20% of those net proceeds.
Financial statements and court filings from Mountain Express’ trustee claim Frady and Wadud used the business to funnel millions of dollars to such entities.
A spokesperson from Blue Owl declined to comment on the settlement.
