(Bloomberg) — An oil refinery that was after one particular of the largest in North The us filed for bankruptcy after a sequence of environmental breaches and a authorities-ordered shut down, highlighting pressures confronted by the oil sector to control its environmental impression.
Limetree Bay Refining LLC sought creditor protection on Monday immediately after the U.S. Environmental Security Agency halted its functions previously this calendar year. The St. Croix, U.S. Virgin Islands-centered refinery, which submitted for personal bankruptcy in 2015 beneath past possession, stated in a assertion that it programs to use the courtroom protection system in Houston to negotiate with lenders and fairness holders and weigh alternatives including asset profits.
The refinery sought bankruptcy “due to serious regulatory and economic constraints” that forced it to suspend its refinery functions indefinitely, and has lined up as considerably as $25 million of so-termed debtor-in-possession funding that will assistance it maintain the refinery through the Chapter 11 approach, according to the statement.
Arena Traders is furnishing the DIP bank loan by means of an affiliated entity, in accordance to men and women with expertise of the situation who asked not to be named talking about a personal make any difference. A representative for Arena didn’t instantly react to a request for remark.
The refinery, which experienced restarted functions in February soon after a long time of inactivity, was well positioned to method sour crude oil materials from South The united states and meet fuel demand in regions these as the U.S. East Coastline.
The 200,000-barrel-a-day refinery in Could was pressured to halt operations subsequent emissions incidents that bundled contamination of drinking h2o. On June 21, the firm stated it was suspending designs to restart the business enterprise and cutting additional than 270 personnel after initiatives to raise cash foundered. In the a long time prior to the difficulties, Limetree expended much more than $4 billion to refurbish the refinery, in accordance to court docket papers.
Limetree’s woes have prompted investigations by the EPA and the Virgin Islands Department of Scheduling and Nationwide Assets, in accordance to court docket papers. The Business office of the U.S. Legal professional in the Virgin Islands also asked for to stop by the refinery, and the company faces a number of course-motion lawsuits associated to the alleged pollution difficulties, the company’s main restructuring officer, Mark Shapiro, reported in court documents.
The company is in talks with regulators about the disorders for reopening, Shapiro explained. Affiliates of BP Plc and Baker Hughes Co. are amid its most significant creditors, according to court papers.
Limetree is controlled by EIG Worldwide Vitality Partners, which stated in an emailed statement that it grew to become the “reluctant” proprietor of the troubled refining procedure in April as component of a restructuring. EIG had previously led a team of Limetree’s so-named mezzanine lenders and has been involved in attempts to revive the refinery given that 2018. EIG, dependent in Washington D.C., specializes in personal investments in electricity infrastructure.
Limetree was formed in 2016 just after an affiliate of ArcLight Funds Companions and Freepoint Commodities LLC acquired the St. Croix refining units and terminal property from Hovensa LLC, a enterprise owned by Hess Corp. and Venezuela’s state-owned Petroleos de Venezuela SA that experienced filed for personal bankruptcy months previously. In 2018, Limetree introduced an roughly $1.3 billion funding system to restart the idled refinery, which started out running earlier this 12 months.
The refinery’s guardian will continue to work its linked oil storage terminal business. That unit is doing work with economic and authorized advisers to navigate fiscal strains associated with the shuttered refinery, Bloomberg claimed on Monday.
The bankruptcy will come at a time when the market is having difficulties with shrinking profitability, surplus manufacturing potential and mounting levels of competition from mega-refineries in Asia amid a force by the Biden Administration to shift the U.S absent from fossil fuels.
The scenario is Limetree Bay Companies LLC, 21-32351, U.S. Bankruptcy Courtroom for the Southern District of Texas (Houston).
(Updates with facts about creditors starting up in 8th paragraph)
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