Spears has high bid on Somerset Refinery

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March 21, 2008

By JEFF NEAL, News Editor The Commonwealth Journal Fri Mar 21, 2008, 07:41 PM EDT

Somerset — A United States Bankruptcy Court judge in London has ruled that Somerset Refinery’s auction sale earlier this week to Sonoma Capital Partners, Ltd., be approved.

The officer representing Sonoma is none other than William Burnside Spears — the man whose company owned the refinery and filed its bankruptcy in the first place.

“Basically a sale has been approved from Bill Spears, who put the refinery into bankruptcy, back to Bill Spears,” said Lexington attorney John Morgan, who represents the interests of former Somerset Refinery owners Roy Shirley and Frank Lynch. “A bankruptcy trustee was appointed because of (Spears’) bad acts, such as not paying his employees. Yet Sonoma’s high bid was approved — and Sonoma is a corporation put together by Spears.”

The total purchase price for the refinery is $8.4 million, which was the high bid received by Chapter 11 Bankruptcy Trustee William D. Bishop. Spears put an additional $2 million into the floundering refinery during the bankruptcy process. The closing is set no later than April 4.

“I think the trustee tried to auction the refinery. ... No one has any issues with the procedure,” Morgan said. “But Spears’ emergence as the winning bidder is certainly interesting.”

Shortly after taking possession of Somerset Refinery and other companies in the PHS Group from Lynch and Shirley last year, Spears and associates filed for bankruptcy protection in Kentucky’s Eastern District U.S. Bankruptcy Court in London — a move which cost them about $350,000 according to court records. (PHS Group, Inc. — the parent corporation of Somerset Refinery and affiliates — derives its name in part from the old “Phoenix Holdings” corporation which was once the umbrella corporation for the group under previous ownership. PHS has no legal connection to Phoenix.)

Lynch and Shirley then filed a lawsuit in Pulaski Circuit Court to regain control of the refinery. Lynch and Shirley contended they were defrauded in a deal coordinated by Spears and USA Energy Corporation. In their original lawsuit, Lynch and Shirley contended that they are victims of a fraudulent “stock exchange” for worthless shares in a phantom “corporation.”

“Basically, (Lynch and Shirley) are right where they were a year ago,” Morgan said. “They received worthless stock — and it’s still worthless.”

Late last year, Pulaski Circuit Judge David A. Tapp ordered a stay of all further proceedings concerning the civil lawsuit before his court. The ruling appeared to be in deference to parallel proceedings in U.S. Bankruptcy Court at London.

A spokesperson at Somer-set Refinery said Spears was out of town and unavailable for comment.

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Pulaski carries Girdler to win

In the weeks leading up to Tuesday’s primary election, it was impossible to miss the colorful signs dotting nearly every Pulaski roadway. The names in the race for the 15th State Senatorial District seat popped out: A.C. Donahue. Chris Girdler. Mark Polston.

Once citizens hit the ballots, however, the results mirrored the dimensions of the signs themselves: Chris Girdler stood the tallest.

Girdler, deputy district director for Congressman Harold “Hal” Rogers, ran away with the votes inside Pulaski County’s borders, earning 3,926 votes for 62.05 percent of the total number cast.

That number more than doubled the next highest vote-getter, businessman Mark Polston, who raked in 1,624 votes for 25.67 percent.

However, Polston — who owns Classic Carpet, a home-flooring business located just off the southern 914 bypass — can claim a moral victory ... three of them, in fact. In all three counties in the district other than Pulaski — those being Adair, Casey, and Russell Counties — Polston actually edged out Girdler.

In Adair, Polston beat Girdler 629 to 394. In Casey County, it was 538 to 417, and in Russell, it was 1,862 to 1,038.

Polston said he just “couldn’t pull it out with the numbers” and that “the machine worked for” Girdler in Pulaski County.

“I think that was their strategy — I think they had a Pulaski County strategy all along,” said Polston. “They played the political game well.”

Polston said the difference between his and Girdler’s campaigns was that “mine was a very, very grass roots campaign,” he said. “I did not have a political machine behind me. I understand how this process works, and in this instance, he prevailed.”

As for why Girdler didn’t take three of four counties, the winning candidate — since there are no Democrats in the race, winning the Republican primary was effectively a final victory for Girdler — said he didn’t have an answer for that.

However, “I believe things happen for a reason and I hope the long and strenuous campaign will only heighten my desire to move beyond the bitterness and partisanship of the recent past,” said Girdler.

“Regionalism is a goal of mine, and I look forward to helping all four counties,” he added, noting that he campaigned heavily in each of them.

Sen. Vernie McGaha, the long-time state senator whose seat the candidates were vying for, actually supported Polston after Liberty’s Todd Hoskins dropped out of the race earlier this month.

Donahue, a local attorney, got 556 votes in Pulaski County, 8.79 percent of the vote. He only received 145 votes in Russell County, 74 in Adair County, and 75 in Casey County, where hometown candidate Hoskins almost matched him with 71 votes despite no longer being officially in the race.

Polston said he’s “still digesting” what happened, and though “the process has been a very good experience for me,” he wouldn’t commit to running again in the future. “I wouldn’t shut the door to anything, but I’m not opening any doors either.”

Still, “I think I got a lot of people involved in the process that had not been involved before and would not have been otherwise,” he said. “A lot of people got out and worked really hard, got motivated to talk to friends and neighbors. I think a lot of people became involved through this campaign that are going to be involved for a long time.”

Girdler stressed his “positive message” and said that Rogers is a “mentor and good friend” that he would turn to for advice in dealing with a frequently combative legislative body in Frankfort, one for which Girdler hopes to help change the culture.

Girdler said that he was “confident and optimistic” during the day Tuesday because he’d “worked extremely hard.” Nevertheless, the realization that he’d won gave him “chill bumps,” he said.

“I’m absolutely honored,” said Girdler. “The position of state senator is more than an honor, more than an office. It’s a charge to keep, and I will give it my all.

“I pledge to be the people’s state senator,” he added. “I look forward to working with everyone to move this region forward.”

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