Refinery Owner Files Chapter 11 in Texas
(Bloomberg) -- Limetree Bay Refining LLC filed for Chapter 11 bankruptcy in Houston on Monday after the U.S. Environmental Protection Agency closed its Caribbean oil refinery.
The St. Croix, U.S. Virgin Islands-based company said in a statement that it plans to use the court protection process to negotiate with creditors and equity holders and weigh options including asset sales.
The refinery sought bankruptcy “due to severe regulatory and financial constraints” that forced it to suspend its refinery operations indefinitely, and has lined up to $25 million of so-called debtor-in-possession financing that will help it maintain the refinery through the Chapter 11 process, according to the statement.
Limetree’s parent company will continue to operate the firm’s related oil storage terminal business. That unit is working with financial and legal advisers to navigate financial strains associated with the shuttered refinery, Bloomberg reported earlier Monday.
The 200,000-barrel-a-day refinery in May was forced to halt operations following emissions incidents that included contamination of drinking water. On June 21, the company said it was suspending plans to restart the refinery and cutting more than 270 workers after efforts to raise capital foundered.
The bankruptcy comes at a time when the industry is struggling with shrinking profitability, excess production capacity and rising competition from mega-refineries in Asia amid a push by the Biden Administration to move the U.S away from fossil fuels.
It’s the refinery’s second trip through bankruptcy court.
Limetree was formed in 2016 after an affiliate of ArcLight Capital Partners and Freepoint Commodities LLC bought the St. Croix refining units and terminal assets from Hovensa LLC, a venture owned by Hess Corp. and Venezuela’s state-owned Petroleos de Venezuela SA that had filed for bankruptcy months earlier. In 2018, Limetree announced an approximately $1.3 billion funding plan to restart the idled refinery, which started running earlier this year.
Limetree Bay Ventures LLC, the parent of the refinery and terminals, is now owned by EIG Global Energy Partners.
The case is Limetree Bay Refining LLC, 21-32354, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
--With assistance from Allison McNeely.
© 2021 Bloomberg L.P.
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