Opponents of Philadelphia Energy Solutions’ bankruptcy plan have vowed a long legal fight if a federal court this week approves a sale that would keep the largest East Coast oil refinery permanently shut while paying out bonuses to company executives.
A June fire at the 335,000 barrel-per-day PES refinery led the company to file for bankruptcy and shut the plant over the summer, laying off more than 1,000 workers and ending long-standing ties with dozens of businesses. The refinery endured years of financial trouble, hurt by poor access to U.S. crude oil production and heavy costs of complying with federal laws on blending biofuels with gasoline.
The PES plan to exit bankruptcy includes a $240 million sale of the refinery to a real estate developer, Hilco Redevelopment Partners. The U.S. Bankruptcy Court for the District of Delaware is scheduled to consider the plan on Wednesday.
Former contractors and worker unions, who are among the long list of unsecured creditors in the case, want the refinery to re-open. Even if the court approves the deal, they are asking the decision to be put on hold pending an appeal, court filings show.
If the court rejects the plan, the unsecured creditors said they would seek mediation or ask the court to convert the Chapter 11 bankruptcy reorganization case into a liquidation bankruptcy, hoping they can gain some of the sale proceeds.
They also oppose the proposed bonuses to PES executives.
The unsecured creditors “may never receive a penny and executives who oversaw the disaster walk away from the cases filthy rich,” the group said in filings.
The unions and other unsecured creditors are pushing for PES to sell to a company that would restart the refinery operation. Another real estate developer, Industrial Realty Group, may present a plan at Wednesday’s hearing to purchase the PES site and lease it for refinery operations, the filings said.
PES, in its response to the objection on Monday, said no credible bidder has emerged with the intention to resume plant operations. Market conditions and damage from the fire also worked against resurrecting the refinery, PES attorneys said.
The U.S. Internal Revenue Service, Environmental Protection Agency and other government agencies have objected to aspects of the proposal, though not to the sale itself. Sunoco Holdings, which once owned the refinery, is objecting to other aspects of the plan.
Source: Reuters.com