On March 21st, Blue Springs Ford (“Blue Springs”) filed a chapter 11 petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Based in Blue Springs, Missouri, Blue Springs has operated as an authorized Ford dealership since 1978.  Like most dealerships, the company sells and services Ford vehicles and provides general maintenance and repair services.  See the Declaration of Blues Springs’ President in Support of First Day Motions (the “Declaration” or “Decl.”) at *2.

At the time it filed for bankruptcy, Blue Springs employed 124 people and had monthly payroll expenses of approximately $557,000.  Decl. at *2.  Blue Spring operates under a financing agreement with Ford Motor Credit Company.  As of the petition date, Blue Spring had a secured debt obligation with Ford Motor Credit for approximately $7.9 million.  The company’s unsecured debt obligations total $2.1 million.  Id.  Blue Spring achieved $60.8 million in net revenues in 2011.

According to Blue Spring, its need to file for bankruptcy “is the direct result of the Debtor’s involvement in pending state court litigation where the Debtor is vigorously defending itself.”  Decl. at *3.  Prior to filing for bankruptcy, Blue Spring was sued in Missouri state court by a plaintiff alleging Blue Spring failed to fully disclose vehicle history regarding the sale of a used vehicle.  The state court litigation went to trial in February 2010 which resulted in a jury verdict against Blue Spring in the amount of $171,520 in actual damages and $1.75 million in punitive damages.

Blue Spring sought unsuccessfully to have the state court judgment reduced, arguing that it was 54 times the amount of actual damages.  With remittutur unsuccessful, Blue Spring appealed.  Due to the size of the verdict, Blue Spring was unable to post bond pending the appeal.  According to Blue Spring, negotiations regarding the a resolution of the state court matter have been unsuccessful.  In order to try to protect itself from the judgment, Blue Spring filed for bankruptcy hoping to “preserve the value of its business and assets.”  Decl. at *4.

The Blue Springs bankruptcy is pending before the Honorable Mary F. Walrath.  Judge Walrath previously served as Chief Judge of the Delaware Bankruptcy Court.  Blue Springs is represented by the law firm Polsinelli Shughart P.C.