A U.S. bankruptcy judge approved Philadelphia Energy Solutions’ plan for Chapter 11 bankruptcy in a Delaware court on Monday, clearing the path for the largest and oldest refinery on the U.S. East Coast to begin its latest recovery, Reuters reported.
The confirmation in the U.S. Bankruptcy Court of Delaware removes the biggest hurdle for the Philadelphia refiner as it seeks to rebound from financial difficulty. PES filed for bankruptcy in January, citing the high cost of complying with the nation’s biofuels obligations.
The bankruptcy comes six years after private equity firm Carlyle Group LP and Energy Transfer Partners LP’s Sunoco Inc rescued the refinery from financial distress.
The plan provides for $260 million of new capital and sets a new deadline of 2022 for repayment of more than $600 million of debt, along with additional investment from shareholders including Carlyle and the refiner’s management.
The plan received unanimous approval from creditors after a number of parties withdrew objections in recent days. The state of Pennsylvania initially opposed the plan, saying PES could owe them an estimated $3.8 billion in unpaid fuel taxes dating to 2015. It withdrew that objection after the parties agreed to language that preserved the state’s ability to collect any unpaid taxes.
The U.S. Environmental Protection Agency and the refiner had previously agreed to a settlement that allowed it to shed about half of its roughly $467 million in outstanding compliance costs under the U.S. Renewable Fuel Standard (RFS). The court has to approve this settlement as well, on April 4.
The Department of Justice held a 10-day public comment period on the proposed settlement. A number of biofuel comments opposed the plan, arguing it rewards PES for mismanagement and flouting the law.
“Although PES attempts to pin blame on the RFS program, it stands alone as the only entity using the bankruptcy court to seek regulatory amnesty from an obligation that affects every refiner equally,” the Renewable Fuel Association wrote the Justice Department.
Allen Tenenbaum, representing the U.S. Justice Department, told the judge on Monday that the agency is “keeping an open mind and will consider the comments to make sure the settlement is appropriate.”
Reporting By Jarrett Renshaw; Editing by Marguerita Choy and Tom Brown
