Published: May 14, 2008 08:35 pm            

Somerset Refinery sale falls through

Businessman William Spears defaults on bid

The “Drop Dead Date” for the sale of Somerset Refinery came and went on Tuesday without businessman William Spears and Sonoma Capital coming up with the $8.1 million-plus that would’ve completed the much-delayed transaction.

Yesterday, attorneys for Chapter 11 Trustee William Bishop filed a Notice of Non-Compliance in the United States Bankruptcy Court in London, Ky., calling for an order allowing him to withdraw the remaining escrow funds.

It appears Sonoma Capital is finally in default and will forfeit all deposits related to the sale that was originally set to close on April 4.

“The record of the court is complete on the issue of whether Sonoma is in default under the sale order, and the characterization of the deposit funds and the extension payment. Accordingly, adjudication on these issues without further hearing is proper,” a court order entered last week said.

The order said, “Sonoma or its counsel must provide the Trustee (William Bishop) confirmation of a deposit of the funds totaling $8,108,600 (the closing funds) or a tracking number for wired funds in transit from the bank or orgin ... “

The order also called for Spears to come up with $300,000 to “replenish (funds) recently withdrawn by the Trustee ... for operating expenses” and $300,000 more “as a good faith deposit toward Sonoma’s obligations to pay any damages claimed by the Trustee related to fees and costs incurred after Sonoma’s failure to close on April 4.”

Sonoma is a corporation created by Spears — the man who acquired Somerset Refinery from local businessmen Frank Lynch and Roy Shirley last year, only to immediately commence layoffs and file for bankruptcy protection.

But when the facility went up for sale in bankruptcy court earlier this year, Spears’ high bid was allowed by the courts.

However, the transaction never worked out.

Attorneys for the Trustee claimed in court documents filed last month that Sonoma Capital defaulted three times beginning with the original closing date of April 4.

It appears the Trustee will now move on to other potential buyers. Ellen Arvin Kennedy, the attorney for the Trustee, said in a memo to Trip Redford, counsel for Spears, late last month that the Trustee was prepared to “begin using his best efforts to remarket the property to the highest bidder.”

Neither Kennedy or Redford immediately returned phone calls to the Commonwealth Journal yesterday.

        

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