Steven Keshtgar, once one of Long Island's largest gas station operators, has run into financial problems and has filed for federal bankruptcy court protection for 15 of his locations.
Keshtgar raised the hackles of drivers and local politicians two years ago when he charged as much as $2 per gallon extra for credit purchases at some stations, in what he called a protest against credit card company fees.
Now he plans to get rid of all but three to five of his 24 locations, said his attorney, Michael Macco of the bankruptcy law firm Macco & Stern LLP, in Melville.
The 15 Chapter 11 bankruptcy filings are in the names of 15 separate corporations operating 14 stations on Long Island and one in Queens. The papers were filed Dec. 24 in U.S. Bankruptcy Court in Central Islip.
Keshtgar referred questions to Macco.
Macco and court papers said Keshtgar first encountered financial problems in 2012 when he tried to convert the financing for three gas stations he had just acquired from a revolving line of credit to permanent financing, a change that would have allowed him to borrow more on the revolving line. Macco said the bank, New York Community, didn't want to lend Keshtgar's companies any more money.
As of last month, Keshtgar's companies owed New York Community $6.6 million, court papers said. Other large debts included $1.95 million to Gulf and Mobil supplier Cumberland Farms and $950,000 to New York State for sales taxes.
Late in 2012, a lack of gasoline after superstorm Sandy forced the closure of some of Keshtgar's stations for as long as seven weeks, cutting revenues drastically. "That was the beginning of the end for us," Macco said.
Later, when the price of gasoline rose, suppliers of fuel, including Cumberland Farms, began demanding larger cash security deposits on fuel deliveries.
Keshtgar's decision to charge up to $2 extra per gallon at some stations led to consumer complaints and several pieces of proposed legislation that would have required curbside signs stating credit and cash prices.
None of the measures passed, said Kevin Beyer, president of the Long Island Gasoline Retailers Association. He said consumers forced the practice to end by paying cash or going elsewhere to use credit cards. "The market corrected himself," he said.