Monday, November 7, 2011

Mocksville Tobacco Companies

A U.S. bankruptcy court judge has halted a Raleigh company's bid to buy three Mocksville cigarettes online companies.

Judge William Stocks approved Friday the request of bankruptcy trustee Peter Tourtellot to deny CB Holdings' offer for Renegade Holdings Inc., Renegade Tobacco Co. and Alternative Brands Inc., which have a combined 100 employees.

Charles Fuller, president and chief executive of CB Holdings, could not be reached for comment about the judge's ruling.

Tourtellot said Monday that the bankrupt companies will refund CB Holdings' $250,000 deposit. He said CB Holdings could submit another bid, but he did not think it was likely.

Although Tourtellot said there is no other interested buyer, "it is fair to point out that our new plan could have many different scenarios. It is my intention to have a new plan of reorganization ready to present to the bankruptcy court by Christmas."

Tourtellot said the CB Holdings deal as it was structured was not in the best interest of creditors, particularly Bank of the Carolinas Corp.

The deal was projected to cost $16.1 million and was originally scheduled to close last week. But CB Holdings' cost of buying the manufacturers could have increased to $17.98 million because of increased delinquent escrow demands by National Association of Attorneys General for $16.7 million.

That would have left only $1.27 million to pay Bank of the Carolinas' secured claim, administrative costs, priority tax claims and unsecured claims, while CB Holdings would have taken control of the companies.

Bank of the Carolinas said it is owed just more than $3 million.

The three manufacturers filed for Chapter 11 bankruptcy protection Jan. 29, 2009, and exited bankruptcy June 1, 2010. They were put back into bankruptcy July 19, 2010, when the reorganization plan was vacated, in large part because of the criminal investigation in Mississippi — at least 3 years old — involving Calvin Phelps, owner of the companies, and accusations of "unlawful trafficking in cheap cigarettes and other related crimes."

Note of the day: Classic page.


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