New bidding and sale dates for Limetree Bay Refinery were approved by Judge David Jones in Southern District of Texas bankruptcy court on Wednesday, pushing a possible final sale to Dec. 3.
Although over 25 companies have requested non-disclosure agreements to view the sale offering –- “a lot of good players are in the mix,” according to one hearing attendee — progress was behind schedule. The extension request, though approved, concerned Jones because of the refinery’s importance in the local economy and narrow window of opportunity for a restart.
Friday is the final day of work for Limetree’s remaining workers. The company had announced in June that it would lay off approximately 270 employees. On top of that, Limetree Bay Terminals announced Monday that it is downsizing 43 percent of its workforce in December, laying off 35 employees.
“As you know I am extremely concerned about this case,” Jones told Limetree lead bankruptcy counsel Elizabeth Green. “I viewed the scheduling motion as a statement of reality. Although you tried to put the most positive spin on it you could, I did not read it as positive.”
The information buyers need to evaluate the refinery for a purchase is now complete and has been placed in “the day room,” a secure but accessible area for evaluation, according to Michael O’Hara of Jeffries Group, which is marketing the refinery’s sale.
In the next week or so, O’Hara will ask his prospects for non-binding declarations of interest. From there, they can be maneuvered to complete their due diligence, he said.
Jones has been concerned in the bankruptcy proceedings to learn what the Environmental Protection Agency will require of the refinery to restart operations. The EPA ordered a temporary shutdown in May after only four months in operation; months that were fraught with toxic emissions and oil sprays. The Trump administration had allowed the former Hovensa facility, built in the 1960s, to be restarted after almost a decade in mothballs, without modernizing its environmental protection equipment.
Jones pressed the EPA’s representative to provide information about what the agency will be looking for from a prospective buyer.
One known requirement is for a new buyer to sign the Hovensa consent agreement as Limetree did for upgrading the facility to EPA standards, according to Limetree lead bankruptcy counsel Elizabeth Green. Limetree is also under criminal investigation for violations of the Clean Air Act. A new buyer won’t be liable for any action arising from the
investigation, however, because a criminal act requires intent, Green said.
The burning question for Jones, Limetree, its prospective buyers and St. Croix residents is whether the EPA will require a permit to restart the refinery after it’s shut down. The environmental watchdog is under enormous pressure, on one hand, to relax its modernization rules in the interest of more jobs, and on the other hand, to enforce its rules to protect the environment and human health.
“We want buyers to know, hey, you may have an issue,” an EPA representative told Jones. “If a permit is required, the refinery will have to install the best available control technology. That could change the economics of a transaction.”
Judge Jones: I am asking EPA to get in a position to address, if there are things that can be done to firm up the EPA’s position. I have a really large timing concern.
EPA: There may be some heartburn with pre-judging something.
Jones: Let’s compress as much as we can, is all I’m asking.
EPA: The buyer may just have to close and EPA will make the permitting decision later.
Jones: Fair enough.
The EPA is working on a document that will let the refinery’s bidders know the concerns and possible requirements.
