Bankruptcy Dismissal Opens Newtown Oil To Lawsuits

By Andrew Gorosko

A federal judge has dismissed Newtown Oil Company’s filing for bankruptcy protection, clearing the way for the state, and potentially for hundreds of the firm’s former home heating fuel customers, to file lawsuits in state court seeking to recover lost money from the firm.

Last November, the company sought protection under Chapter 11 in US Bankruptcy Court in Bridgeport.

 On May 6, Judge Alan H.W. Shiff dismissed the bankruptcy filing. In his order, Judge Shiff determined that the bankruptcy petition “was filed on behalf of a nonexisting entity” known as Westville Distribution and Transport, which was doing business as Newtown Oil Company.

“A case must be dismissed if the court concludes that the petition which commenced it was filed on behalf of a nonexisting entity,” the judge ruled.

State Attorney General Richard Blumenthal and the state Department of Consumer Protection have been investigating complaints from Newtown Oil customers. Those customers had entered contracts with the firm last winter, paying in advance for fuel deliveries. The firm, however, failed to make those deliveries.

Mr Blumenthal said Thursday that he plans to file a lawsuit against Newtown Oil, under the terms of the Connecticut Unfair Trade Practices Act, in seeking to recover the funds that consumers lost when the oil company did not make deliveries, as was contractually required.

Individual consumers who lost money may also pursue individual lawsuits against the firm if they choose, he said.

The state will continue to seek refunds for people who lost money when Newtown Oil failed to honor its fuel purchase contracts, the attorney general said. The state will seek to recover as much lost money, as soon as possible, for affected consumers, he said.

Mr Blumenthal said he may also pursue criminal charges against Newtown Oil.

William Trudeau, Jr, who state officials believe controlled Newtown Oil, is awaiting sentencing on unrelated federal criminal convictions.

 The attorney general said the state’s civil lawsuit against Newtown Oil will contend that the firm made defective and misleading promises to consumers about home heating fuel delivery, when the firm knew that it could not deliver that fuel. Both the firm and individuals working for the firm should be held accountable for the financial losses, Mr Blumenthal said.

 The attorney general stressed the state hopes to recover funds for affected consumers as soon as possible.

“We see scams against consumers, unfortunately, quite frequently,” Mr Blumenthal said.

 The Newtown Oil situation is “particularly troubling” due to the scope of the problem, he said.