A Lakewood petroleum distribution company with 10,000 customers in 12 Western Washington counties Friday shut down its operations after a plan to reorganize its business foundered.
Pettit Oil Co. will liquidate its assets, said the company's bankruptcy attorney, Brian Budsberg of Olympia.
Those assets include a fleet of some 70 vehicles and facilities in some 20 Western Washington cities.
Budsberg said the decision to sell the company's assets came after a federal bankruptcy judge Thursday declined to order the company's sale to Associated Petroleum Products of Tacoma because one of Pettit's largest creditors, U.S. Bank, objected.
Pettit filed for Chapter 11 bankruptcy reorganization late last year in U.S. Bankruptcy Court in Tacoma. Pettit President Chris Sather listed the company's assets at $18.69 million and liabilities of $22.47 million.
The company initially sought to keep its operations running while it reorganized under the bankruptcy code.
But the banks providing ongoing credit to Pettit in its high cash flow business, declined to give the company a large enough credit line to maintain its business volume, said the oil company's attorney.
That credit shortage led to customers abandoning Pettit and a downward business spiral, said Budsberg.
The company, according to its web site, once employed some 200 workers. At the end, that workforce had been reduced to about 125. All were paid up for their labor up to the end, said Budsberg though they received no money for unused vacation days or sick leave.
Pettit provided petroleum products to individuals and businesses.
The oil distributor first encountered major problems in November when one supplier refused to load Pettit's trucks with petroleum products because it had not been paid for prior loads.
Pettit claimed in court documents that the failure to pay was the result of a bank error. Pettit's controller called the supplier and paid the bill promptly, but the supplier cut how much product it would give Pettit on credit until it had conducted a credit investigation.
Pettit reported to the court that it sold some $319 million worth of petroleum products in 2012. The company had sold substantially less in 2013 through mid-November.