Car dealership Blue Springs Ford Sales Inc. will have to roll out its reorganization plans in Missouri, not Delaware.

Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware in Wilmington at a first-day hearing March 23 ruled that BSFS's bankruptcy case should resume in the U.S. Bankruptcy Court for the Western District of Missouri, according to debtor counsel Michael M. Tamburini of Polsinelli Shughart PC.

Tamburini said BSFS is incorporated in Delaware but that all of its assets and operations take place around Kansas City, Mo., leading Walrath to determine that venue would be better equipped for BSFS's bankruptcy. The judge's ruling did not stem from a creditor motion to change the venue.

While the debtor argued against the transfer during the hearing, BSFS will not challenge the court's ruling, Tamburini said.

He was unsure exactly when the transfer will take effect. No order had been entered with the court as of midday Monday, March 26.

On March 23, Walrath also gave BSFS interim approval to use an $8 million debtor-in-possession loan, pay prepetition wages, continue using existing cash management systems and honor customer obligations.

Walrath did not schedule a final DIP hearing due to the venue transfer, but she ruled the interim orders will expire in 30 days. She also ruled BSFS cannot draw more than $1 million of the DIP loan per week before entry of a final order.

The DIP is an extension of a prepetition credit line from Ford Motor Credit Co. BSFS will use the wholesale financing, first extended in 1978, to replenish inventory as the dealership makes sales.

Advances will bear interest at rates set by Ford Motor Credit and Blue Springs, but amounts not paid when due will accrue interest at 15% per annum or the maximum contract rate under Missouri law.

The DIP matures on consummation of a reorganization plan.

BSFS, a Blue Springs, Mo., Ford Motor Co. dealer, filed for Chapter 11 on March 21, with plans to appeal a more than $2 million judgment awarded Michael and Kimberly von David, who asserted they were sold a rebuilt wreck in 2002.

Documents show BSFS could not post a bond equal to the judgment pending the appeal. BSFS plans to commence the appeal while in bankruptcy and hopes the automatic Chapter 11 stay protects the company from the plaintiffs' ability to force execution of the judgment.

An approved dealer of Ford vehicles since 1978, BSFS sells and services new and used Ford cars, as well as provides repair and maintenance services.

BSFS's business was hurt by the economic downturn, but the business has remained "operationally sound," according to a declaration by company president Robert C. Balderston. For 2011, the company reported net revenue of $60.8 million. Balderston asserted in documents that the filing was a direct result of the von David litigation.

The von Davids sued BSFS in the Circuit Court of Jackson County, Mo., for allegedly failing to adequately disclose a full, detailed history of the used car they purchased. The plaintiffs sought damages of $32,051, as well as punitive damages for fraud.

The court held a trial on Feb. 16, 2010, and 10 days later a jury ruled in favor of the plaintiffs, awarding them a $171,520 judgment plus $1.75 million for punitive damages. The judgment was subsequently amended to include $137,070 to cover the von Davids' attorney fees. BSFS sought remittitur from the judge -- either a reduction or overturning of the verdict -- but the court denied the request.

BSFS asserted that the jury verdict contradicts U.S. Supreme Court rulings because the allowed punitive damages are far in excess of law-imposed limits -- the judgment is more than 54 times the original damages sought, documents show. BSFS also said the judge committed numerous legal errors.

In its petition, BSFS listed assets and liabilities between $10 million and $50 million. Unsecured obligations total $2.1 million, documents show.

Along with Tamburini, Christopher A. Ward, James E. Bird and Andrew J. Nazar of Polsinelli Shughart are also debtor counsel.