Filing: Pennsylvania Says Bankrupt Refiner Owes $3.8B In Taxes
NEW YORK, March 19 (Reuters) - The state of Pennsylvania wants a federal judge to halt the bankruptcy of Philadelphia Energy Solutions (PES), arguing the refiner owes an estimated $3.8 billion in fuel taxes, according to a court filing on Friday.
The state's Department of Revenue said the refiner must make several changes to the proposed restructuring plan to ensure the taxes are paid before it can support the plan.
The $3.8 billion figure is significant for a refiner that had just $43 million in cash on hand when it filed for bankruptcy protection in January. The tax liability stems from a pending audit of the company's books, the state says, and could be adjusted pending the outcome.
"The Commonwealth believes, however, the final audit may produce a substantial liability which could impact the feasibility of the Debtors’ Plan," state attorneys wrote.
The tax issue stems from unpaid fuels taxes, interest and penalties from 2015 to January of this year, court documents show.
A state spokesman on Monday said it could not provide any more details beyond the filing because of taxpayer confidentiality.
The state needed to file a claim to ensure the tax liability is not forgiven as part of the bankruptcy, and the high figure was likely a bargaining tactic, Chris Ward, chair of the Polsinelli law firm’s bankruptcy group, said.
“In all these cases, the taxing authority always estimates the highest possible amount that could be possibly due. I am sure they got the debtor's attention" said Ward. "Given the value of the company, there's no way the liability can be in the billions."
The U.S. Trustee overseeing the bankruptcy filed an objection on Monday, arguing unsecured creditors are not protected under the current plan and requesting changes before the office can support the plan.
PES did not return phone calls and emails seeking comment.
PES filed for bankruptcy protection in late January, blaming the costs of complying with the nation's biofuels laws . The U.S. Environmental Protection Agency and the company struck a settlement last week, granting PES temporary financial relief.
Reuters reported that other factors may also have played a role in the bankruptcy, including the withdrawal of more than $590 million in dividend-style payments from the company by its investor owners.
The bankruptcy plan was prepackaged and has near unanimous support from creditors. The company hopes to have the plan confirmed by a judge on March 26.
(Reporting By Jarrett Renshaw Editing by Susan Thomas)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Philadelphia Energy Solutions Gets Court Nod Over RINs Burden Relief (Apr 05)
- Filing: Pennsylvania Says Bankrupt Refiner Owes $3.8B In Taxes (Mar 19)
- Fight Over Ethanol Escalates as Bankruptcy Refuels Debate (Feb 13)