Sam’s Automotive files for bankruptcy amid delays in Englewood development battle

Sam’s Automotive has filed for bankruptcy to stall a foreclosure of its property at Oxford Avenue and Navajo Street in Englewood.

Majority owner Mike Chavez told the Englewood Herald that the Aug. 23 bankruptcy filing is “absolutely” a result of unexpectedly long delays in his plan to sell the site to an apartment developer. The property at 1314 W. Oxford Ave. is still owned by Sam’s Service Co., which did business for decades as Sam’s Automotive, and the Chapter 11 bankruptcy filing puts the foreclosure on hold.

“When we started this it was supposed to have been a turnkey operation,” Chavez said of his agreement to sell the 5.4-acre Sam’s body-shop site for $13.5 million to Texas-based apartment developer Embrey Partners, which plans to build a 395-unit residential complex there.

But it’s been nearly two years since Embrey and Sam’s signed that deal. A string of delays — including back-and-forth petition fights and now a court case over attempts to stop the rezoning needed for the development — has kept the deal from coming to fruition far longer than Chavez anticipated.

The delays mean the site lacks the “non-appealable zoning” that Embrey requires before it will start paying Chavez the escrow portion of the ultimate $13.5 million transaction. Without the escrow payment that Chavez had counted on to cover the expenses of the now-closed Sam’s Automotive, the business has been unable to pay bills — including the interest payments on a $2.8 million loan that would have come due as a “balloon” at the end of this month.

That loan was made by the Florida-based Kresher Capital private lending operation, which launched a foreclosure of the Sam’s property on Aug. 11. Sam’s Automotive took out the loan in September 2022, a time when Chavez so firmly believed the Embrey development plan faced smooth sailing that he closed Sam’s at the end of the following month.

“Then things started getting postponed,” Chavez said.

Delays begin

First the City of Englewood wanted more traffic and sewer studies, Chavez said. With those squared away, a city council public hearing on the necessary rezoning was held on March 6 of this year, with final approval of the planned unit development (PUD) rezoning on April 3.

But it turned out that the PUD approval wasn’t so final. Englewood residents who were opposed to apartment development — including some who were energized by their anger at four city council members who were then touting a plan to allow fourplexes in single-family zoning — circulated a referendum petition to undo the Sam’s PUD rezoning and keep it as industrial zoning.

In June, the city clerk’s office ruled the petition had enough valid signatures to set a referendum vote on the rezoning, but Embrey worked with a city resident to require a hearing on the clerk’s finding, and the hearing officer threw out more petition signatures and found the petition insufficient.

The neighborhood residents who had launched the referendum petition, Davon Williams and Gary Kozacek, then filed a legal complaint in Arapahoe County District Court against City Clerk Stephanie Carlile, alleging various procedural errors in the course of the petition fight. The continuing court case is what is keeping the Sam’s site from having the “non-appealable zoning” that Embrey requires before disbursing any money to Chavez.

The city is fighting the legal complaint with the assistance of private counsel, which filed a motion to dismiss the case on Aug. 21. If the court dismisses the case, the response periods that are allowed for each side mean the earliest the Sam’s rezoning could be “non-appealable” would be mid-October — but there are no guarantees about any of that.

“My debt is a quarter of the value of the property,” Chavez said. The bankruptcy petition lists more than $3.9 million in total liabilities, most of which is the outstanding loan from Kresher, and nearly $14 million in assets, most of which is the still-unrealized $13.5 million sale price of the Sam’s lot.

In addition to the money owed to Kresher, Sam’s other creditors include the Small Business Administration for nearly $140,000, supplier FinishMaster Inc. for nearly $137,000, and the Arapahoe County treasurer for nearly $100,000 in property taxes.

Bankruptcy stops clock

In a lengthy phone call with the Herald, Chavez emphasized several times that the Chapter 11 bankruptcy is a reorganization to allow him time to pay all creditors everything they’re owed while stalling the foreclosure filed by the Florida lenders. “I will make everybody whole once this thing’s done,” he said.

The stigma of bankruptcy weighs heavy on Chavez, who told the Herald he had long prided himself on paying his obligations on time. “I’m so ashamed of this,” he said. “I wake up at 3 o’clock in the morning. I pace. I can’t sleep so I get up and make some coffee — y’know, I gotta stop thinking.

“Actually I’ll clean my house or I’ll get on my treadmill or I’ll go walk the dog. About 5 o’clock I’ll lie down another 45 minutes or an hour. Rinse and repeat the next night.

“It’s sad. It’s humiliating. I’m embarrassed.”

Ultimately, Chavez expects that the delays will end, the Embrey deal will go through, his creditors will be paid, and the apartment complex will be built on land that, finally, he will no longer own.

But even if the Embrey deal doesn’t pan out, at age 67 and with his longtime business now closed, Chavez will be getting out of the rat race one way or another.

“Every week I’m getting a phone call from someone who wants to know about the property,” he said of would-be buyers.

“If the runway runs out on Embrey, I’m gonna look for a quick closing. I’ll look for someone who doesn’t need to deal with zoning,” Chavez said, mentioning a FedEx contractor who might want the property for its existing industrial use.

Still, his hope remains a deal with Embrey, with any luck by the end of the year, rather than taking a lower offer for industrial use.

Other buyers might think he’s desperate, Chavez said, but he won’t be lowballed: “I’m a fighter.”