The company that owns two commercial properties in Astoria and Gearhart where hardware and lumber stores have long conducted business has sidestepped a foreclosure auction on the two properties by filing a last-minute petition requesting Chapter 11 bankruptcy protection.

The properties are owned by SFRP Group and occupied by Astoria Builders Supply and its sister business Gearhart Builders Supply. According to the Oregon Secretary of State’s office, Randy and Deborah Stemper are the principal owners of SFRP Group, and Randy Stemper is also the principal owner of the two Building Supply companies that are tenants in the SFRP properties.

The properties were slated for the auction block on the steps of the Clatsop County Courthouse Monday as part of foreclosure proceedings against the SFRP Group, which owes more than $1 million to creditors.

But Sunday, SFRP Group submitted paperwork with the U.S. Bankruptcy Court for the District of Oregon requesting protection from creditors under Chapter 11.

Since the deep recession of fall 2008, this bankruptcy filing is the largest and highest profile prospective business failure in Clatsop County.

The court filings place a stay on selling the properties at auction. Under Chapter 11, the businesses are allowed to restructure and reorganize, which would keep them operational despite the financial hardships.

A lot of times, businesses will restructure leases, or theyll ditch leases completely after they file for Chapter 11, said bankruptcy attorney Ryan Hackett, a partner with Hackett & Harris, a Portland law firm.

Its a completely different procedure than filing for Chapter 7 bankruptcy, which typically means that a business is looking to dissolve its assets and stop operations, he said. Thats the more common form of bankruptcy filing.

Attorneys for the Stempers limited liability company SFRP Group could not be reached for comment by deadline.

According to court documents filed Sunday, SFRP Group owes less than $2.34 million to fewer than 50 creditors. The debts are listed primarily as business expenses.

While not all of the debts are listed in the bankruptcy filing, other debts are obvious. On July 3, Columbia State Bank filed a civil contract dispute in Clatsop County Circuit Court against Randy Stemper seeking $1.25 million. On the companys Gearhart tax lot, $33,998 is owed in back property taxes for 2010-11, according to the countys taxation office.

Alex Poust, a bankruptcy attorney for creditor General Electric Capital, said his client had no intention of suing SFRP Group and was working to clear up the situation.

Both Builders Supply stores have been staples of the countys business community for decades.

Astoria Builders Supply started in 1942 under a different name and was incorporated in 1967. Randy Stemper purchased the Gearhart location in 1990 and last made a renewal payment for its articles of incorporation in June.

Standing on the steps of the Clatsop County Courthouse, process server William T. Waite read the notice of auction script to no one in particular.

He said the notice of the bankruptcy filing came on very short notice.

The opening bid for the building occupied by Astoria Builders Supply was listed at about $1.4 million, while the bid for the building occupied by Gearhart Builders Supply was listed at $750,513, two of the highest prices hes seen.

I wish I got a commission on these, Waite said.

CORRECTION

This article has been corrected to correctly identify the entity that filed for bankruptcy protection, and the relationship between that company and its tenant businesses.