It looks like there’s a solution in sight in the saga of Fred Fuller Oil and Propane.
The Hudson-based company filed for bankruptcy a week ago. Now, the state says there’s a buyer - Rymes Propane & Oil – and that the buyer will honor customers’ pre-buy oil contracts.
I spoke with New Hampshire Attorney General Joseph Foster about this tentative agreement.
Fred Fuller Oil filed for bankruptcy last week but your office had been in contact with the company since delivery problems began last winter. When did the effort begin on your end to try and assist in seeking a buyer and what did it entail?
We have been monitoring things through the year with them. Really, we began thinking of alternatives when Sprague brought their lawsuit trying to recover their funds so discussions began at that point in time. There weren't specific talks about a buyer but talks about what options might be open.
Sprague energy as you mentioned is a part of this agreement. They had sued for upwards of four million dollars, and Sprague is going to be selling oil at cost as part of this agreement...
The lawsuit itself was stayed by the bankruptcy proceeding, and this overall agreement as I understand it will lead to Sprague being satisfied in full - and when I say "in full" it's in their terms, I believe there may be a compromise on the amount that they are going to receive. When folks say they helped come to the solution that's one of the various ways they did that.
For customers this winter is it as simple as they will have a different delivery truck coming to fill their tanks or is there more to it?
If things go as we hope it should be pretty straightforward for consumers. It should be noted the sale still has to be approved by the bankruptcy court and ultimately closed. So like every business transaction this is a first step, a very good first step, we're hopeful and optimistic it will lead to a closing, but until that occurs I can't say to consumers for sure that they will have nothing to worry about. In fact I know my assistant Peter Roth has advised consumer to file a proof of claim at the bankruptcy court to protect their interests.
After the delivery difficulties last winter, lawmakers pass a bill tightening the rules around pre-buy contracts and that's set to take effect January 1st, 2015. Would the provisions in that law have headed off this current situation had they been in effect?
It would have helped somewhat. You know, there's always a risk with pre-buy circumstances. I'm not an expert on the change of law, I do know that among other things they put in place an inventory requirement as well as others. But whenever you're advancing credit to somebody there's always some risk and that's really what's happening here. They're putting down a deposit for months in the future and if circumstances change for an oil dealer you can have these kind of ramifications. Things are better than they were, but there's not a cash deposit, there's not a letter of credit backing that consumer deposit so there's still some risks.
How confident are you that we may or may not see a situation like this occur again if a company starts to have financial difficulties?
I can't say that if an oil dealer ran into financial difficulties that there would be no ramifications for consumers. The only way you could really have that is if you have a cash deposit of some kind that was backing up the money consumers put up. Without it, a letter of credit, a bond or some similar instrument, there are still some risks.
But this isn't necessarily indicative of a problem with the heating oil industry as a whole in the state?
No. I mean, we have had some oil dealers fail in the past. I mean most are financially strong and many don't take the kinds of sizable deposits that Fred Fuller did. While I'm told that his isn't out of the norm in terms of an overall percentage of his business, there are some dealers that don't take pre-buys at all.
As this deal goes forward you'll still have some work to do?
We're always going to be available if we see problems arise and to do our best to make sure consumers get what it is that they're looking for.