Dive Brief:
- SQRL Service Stations LLC is being forced into Chapter 7 bankruptcy after its trustee said the company is not operating any gas stations and has no chance at reviving its business, according to a Nov. 14 motion filed with the U.S. Bankruptcy Court for the Northern District of Texas, Dallas division.
- The motion was filed about three months after SQRL’s owner, Gas Hub LLC, filed for Chapter 11 bankruptcy with over $1.2 billion of debt. That filing was an attempt to revive the business, but after conducting an investigation, the trustee determined that there’s “no realistic hope of selling this business as a going concern or of a successful reorganization.”
- SQRL’s shift to Chapter 7 may mark the last gasp for the once-promising convenience retailer, which has collapsed in epic fashion since bursting onto the scene in late 2023.
Dive Insight:
SQRL’s bankruptcy trustee, Anne Burns, clarified in the motion that when she joined the case in early November, she learned that SQRL has no bank account or income and has not paid rent for any of its leases in six months.
Beyond that, Burns shared that Gas Hub CEO Jamal Hizam failed to comply with the basic requirements of a Chapter 11 filing, which included establishing a debtor-in-possession bank account and providing proof of adequate insurance.
“The Trustee is now thrust into the middle of this administrative minefield to address the deficiencies of the Debtor with no resources and no records,” the motion stated.
These findings made Burns request court permission to shift the case from Chapter 11 to Chapter 7, which was approved this week, according to documents filed in the case.
Burns has determined that the only potential value to be recouped is by liquidating SQRL’s assets, which includes its personal property; c-store furniture, fixtures and equipment; and any litigation claims.
Whether or not Hizam complies with the court remains to be seen. Hizam told C-Store Dive earlier this year that he was refusing to vacate SQRL’s locations despite many landlords fighting to evict him after terminating their leases. One of those landlords was Blue Owl Capital, which previously leased over 220 locations to SQRL.
In late 2023, SQRL, then owned and run by founder Blake Smith, acquired over 200 former Mountain Express c-stores, immediately becoming a significant c-store player. Smith said at the time that he aspired to reach 500 locations by the end of 2024, but the company quickly found itself with severe liquidity issues. This resulted in several rounds of layoffs, multiple investigations by the Department of Labor and, ultimately, a $17 million sale of its c-store leases to Hizam.
Counsel representing SQRL did not respond by press time to comment. A spokesperson for the Office of the U.S. Trustee declined to comment.
