A hearing that had been scheduled for Tuesday afternoon to finalize the sale of the Limetree Bay Refinery to St. Croix Energy has been postponed after a federal bankruptcy judge ruled in favor of a motion to reopen the auction to allow another company to bid on the shuttered facility.
U.S. Bankruptcy Judge David R. Jones, from the U.S. District Southern District of Texas, agreed to the postponement after an hour-long hearing Monday afternoon, ruling that the circumstances were unusual enough to entitle the potential new bidder, Jamaica-based West Indies Petroleum, a chance to bid.
The hearing was held online and drew more than 100 logged-in lawyers and other interested parties.
According to attorney Elizabeth Green, who represents the debtors, West Indies’ bid is about $10 million more than St. Croix Energy’s approximately $20 million bid, which had been declared the winning bid after the auction on Nov. 18.
Green said it had been the intention of the Jamaican company to bid, but its CEO, a retired investment banker who was the sole company official handling West Indies’ preparation for the auction, had suffered a serious, sudden “medical emergency” shortly before the auction was slated to begin.
“They were actually the lead bidder before the deadline,” Green said. Because the medical situation left it unclear whether the company would be able to take part, the auction went forward as scheduled.
Lawyers for two other bidders – Texas-based Bay Ltd. and Sabin Metal Corp. – objected to the delay. They were prepared to argue at the Tuesday sales hearing that their bids, when combined, were superior to the St. Croix Energy bid.
In part, the difference between the bids is that St. Croix Energy is a “going concern” bidder, intending to reopen and operate the refinery that has sat vacant since May when it was ordered closed by the Environmental Protection Agency due to pollution being spread across the southern portion of St. Croix during attempts to get it running after having sat idle since 2012.
Bay and Sabin, on the other hand, intend to close and dismantle the refinery and restore the island.
Patrick Hughes, representing Bay, said the auction had been well run, and reopening it would be “an extreme hardship” on his client.
“We contend reopening the bidding for a non-participant would be pretty much unprecedented … I am incredulous that we would be doing this because someone fell ill,” he said.
Hughes called the refinery “an asset that has polluted the island and done harm to its people.” He said Bay and Sabin – which did not actually submit a joint bid but would likely be working together – will restore the island, employ hundreds of people and create a pathway to deal with environmental issues. He also said being able to restart the refinery would be “highly unlikely.”
Summing up the hour-long testimony, Judge Jones said he believes deeply in the sanctity of the auction process. “Absent unusual circumstances, the auction process is absolute,” he said. But he said all the interested parties should be given an opportunity to take part.
“I accept at face value that West Indies was an interested party,” Jones said, and that the company officer’s illness was not a maneuver to gain an unfair advantage.
He also noted that “everyone who read the procedures could see there was a chance the bidding could be reopened.” That being the case, the judge said, “I see very little harm in granting what the debtor has asked for.”
Rather than start the auction over, the judge ordered that the auction resume on Dec. 17 with West Indies’ bid. Then St. Croix Energy and Bay and Sabin – as a joint bidder – could continue bidding along with West Indies until a winner is determined.
A sales hearing was scheduled for 10 a.m. Dec. 21, at which point the judge said attorneys for Bay and Sabin Metal will have the chance to argue that their bid is superior to the “going concern” bids of the other two companies.
That hearing is expected to take the whole day.