Maysville-based Lykins Enterprises, which owns 14 convenience stores around Kentucky and Ohio, has filed for bankruptcy protection.
"The good news is we have valuable assets, and we are optimistic we will be able to meet our obligations going forward," said founder David O. Lykins Jr. "We appreciate the support of our vendors and suppliers, but most of all, our customers in both wholesale and retail."
He said customers won't see any difference in the company's day-to-day operations.
The company's three largest unsecured creditors are Chevron Oil Products, which is owed $841,444.28; Marathon, which is owed $480,085.07; and Shell Oil, which is owed $425,179.46.
Lykins formed the company in the late 1970s after working as an agent for Ashland Oil. According to the filing, the company first experienced cash flow problems in 2007 in the midst of a two-year expansion that saw the construction of four stores and the purchase of an additional one.
The filing stated that an employee was found to be embezzling funds during that time period and "to compensate for the financial hardship," the company leased four of its 14 convenience stores.
The company's problems continued in 2008 as the price of oil fell and gasoline revenues declined. In mid-2009, the company lost about $1 million in a short time when the price of oil dropped, the filing stated.
The company also blamed the growing presence of gas stations operated by large retailers like Wal-Mart that undercut their profit margins on gasoline. And the company said its short-term cash flows have been affected by confusion from its fuel suppliers, who have charged the company for purchases made by an unrelated Ohio company with a similar name.
The Jan. 29 filing indicates the company has 50 to 99 creditors. The company has assets of $50,000 or less and liabilities between $1 million and $10 million, according to the filing.
In the days after the initial filing, the company reached a deal with Chevron and Shell to continue receiving fuel and will pre-pay for petroleum products.
"We plan on revising our cash management system, tighten up our receivables and emerge from Chapter 11 as soon as possible," Lykins said.