NEW YORK: A U.S. bankruptcy judge on Thursday approved a process for the sale of the Philadelphia Energy Solutions oil refinery, the largest and oldest on East Coast, under which city officials and a trade union will consult on the matter.
The plan resolves earlier objections by giving the United Steelworkers union and Philadelphia city officials access to the identities of bidders and, in some cases, the ability to speak with potential buyers, according to the order signed by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware.
An auction date for the PES refinery was set for Jan. 17 in New York.
PES collapsed into bankruptcy on July 21 and put its 335,000 barrel-per-day refinery up for sale after a fire tore through an alkylation unit at the Girard Point section of the plant a month earlier. Most of the 1,100 PES workers, including more than 600 members of the United Steelworkers local union, were laid off without severance or benefits.
About a dozen parties have shown interest in buying the plant, pitching various uses for the facility, including a biofuels operation and restoring the oil refinery back to its full capacity.
The city, community activists and workers advocates have called for more transparency in the sale process of the fire-damaged plant, which could require city-issued zoning and other permits for approval.
Gross on Thursday also signed off on an additional US$35 million in debtor-in-possession financing for PES, giving the refiner more time to pay legal fees and other bills as it fights for insurance coverage tied to the fire.
PES has already received US$65 million in bankruptcy financing and a US$50 million advance on future insurance proceeds. However, it has been unable to receive any of the US$1.25 billion in property damage and business interruption insurance coverage.
To secure the debtor-in-possession deal, PES reached an agreement with ICBC Standard Bank, allowing the bank to retrieve crude oil and product that has been stranded at the facility since it closed. ICBC Standard will have 125 days to remove the oil, which it owns under an intermediation agreement with PES.
At the time of the fire, ICBC Standard said it had US$1.6 billion worth of crude and products stored at the refinery.
(Reporting by Laila Kearney; Editing by Tom Brown)