BANGOR, Maine — A federal bankruptcy judge has been asked to approve an unconventional proposal to settle more than $300,000 in debt that an Eagle Lake convenience store, co-owned by Rep. John Martin, owes creditors.
Martin, a Democrat and former speaker of the Maine House, is running for re-election in House District 1, which includes Eagle Lake and Fort Kent.
His Bald Eagle convenience store is located on Route 11 in Eagle Lake. Until September, it was owned by Eagle Lake Outfitters Inc. Martin owned 50 percent of the firm and Gary Voisine of Fort Kent owned the other 50 percent, according to court documents. Voisine was listed as president.
Eagle Lake Outfitters filed for Chapter 11 bankruptcy protection in February, according to documents filed in U.S. Bankruptcy Court in Bangor. Chapter 11 of the Bankruptcy Code allows a business to petition the court so it can reorganize its debt.
The bankruptcy came to public attention in March during a hearing on a bill Martin sponsored to allow mining on Bald Mountain in Aroostook County. Martin addressed the Legislature’s Environment and Natural Resources Committee to dispel rumors that he had a conflict of interest because of the bankruptcy debt, according to a previously published report by the Maine Center for Public Interest Reporting.
Last month, U.S. Bankruptcy Judge Louis H. Kornreich approved the sale of Eagle Lake Outfitters Inc. to Bald Eagle Inc. for $125,000, according to court documents. Bald Eagle is a new enterprise formed by Martin and Voisine.
That $125,000 is all that is left in the “estate” of Eagle Outfitters, according to court documents. It is being administered by Bangor attorney Michael S. Haenn, who was appointed by the judge to act as the bankruptcy trustee in the case.
The store continues to operate at 3318 Aroostook Road.
On Monday, the Portland attorney representing Irving Oil Marketing, which is owed more than $250,000, filed a motion to dismiss the case and suggested a way to pay creditors a portion of what they are owed.
Randy Creswell asked Kornreich to approve a structured settlement under the Chapter 11 rules rather than convert the case to Chapter 7.
Chapter 7 requires the liquidation of a firm under specific rules and the administration of the court, according to Black’s Law Dictionary.
“Irving believes that a structured dismissal is far superior to either the conversion of the case to Chapter 7 or a time-consuming liquidation plan, because, ultimately, the same result will be achieved by a structured dismissal, but in a short amount of time and at a substantially lower administrative cost to the estate and its creditors,” Irving’s attorney wrote in his motion to dismiss.
A structured dismissal would allow creditors to receive a portion of the money they are owed.
When Eagle Outfitters filed for bankruptcy, it listed debts of more than $300,000, including more than $250,000 owed to Irving Oil Marketing Inc. of Portsmouth, N.H. Irving last year obtained a lien for $250,925 against Eagle Lake Outfitters in Kennebec County Superior Court. The firm also owed $259 to Eagle Lake Water & Sewer and $2,960 in property taxes to the town of Eagle Lake.
Creditors included the Internal Revenue Services, owed about $4,455 in withholding taxes for the last quarter of 2011; the Maine Revenue Services, owed nearly $1,700 in sales taxes for 2011; and the Maine Department of Inland Fisheries & Wildlife, owed more than $2,000 for licenses and regulations, according to documents filed in February. It owed other creditors $39,470, including more than $600 to MEMIC for workers’ compensation insurance.
The property taxes owed Eagle Lake and the money owed the local water district were paid when Bald Eagle purchased Eagle Outfitters, according to court documents.
The filing said the company had about $6,800 on hand in cash and its bank accounts. Accounts receivable were listed as $12,550.
The real estate where the store is located was valued at $85,000 and the inventory and fixtures were assessed at $27,500.
Under the rules of bankruptcy court, the trustee and accountant would be paid the full amount they are owed along with the IRS and DIF&W. The remaining money would be paid out to creditors on a prorated basis.
For example, if there were $100,000 left in the estate after administrators and government entities were paid and if the money owed Irving was 80 percent of the total amount of debt, Irving would receive $80,000.
A hearing on Creswell’s motion is scheduled to be held Nov. 29 before Kornreich.
Haenn has until Nov. 21 to file an objection to the motion.
Efforts to reach him Tuesday were unsuccessful.