Alvin Baez/ Reuters

The installations of the Limetree Bay refinery in St Croix. The federal government shut the operations
after a series of polluting incidents, for which current and previous owners are now being sued.

– The St. Croix refinery says environmental litigation against its current and former owners would distract from its restructuring goals

By Andrew Scurria / WSJ

NEW YORK
Petroleumworld 12 07 2021

The bankrupt Limetree Bay oil refinery in the U.S. Virgin Islands asked to halt pollution lawsuits from proceeding against its current and former private-equity backers, saying it can’t afford to be drawn into litigation against them.

The lawsuits already are on hold against Limetree Bay Refining LLC after it filed for chapter 11 earlier this month, but are proceeding against its co-defendants, including its controlling owner, EIG Global Energy Partners LLC. On Monday, the refinery asked the judge overseeing its bankruptcy to extend the litigation reprieve for 60 days to EIG and other, prior owners.

If granted, the request also would suspend litigation against a nearby oil-storage facility that depends on the refinery for business. EIG, which backs both the refinery and the terminal, declined to comment.

Personal-injury and property-damage claims have piled up against the refinery since February, when it restarted after several years offline. Months later, federal authorities shut the refinery after several polluting incidents, including a release of airborne oil droplets that rained down on neighboring areas in May. Bankruptcy followed.

The refinery said Monday it is so intertwined with its co-defendants that allowing lawsuits to go forward against them would distract its management from more pressing tasks. Even if the refinery isn’t involved in the proceedings, it would be affected by any liability findings, according to its filing in the U.S. Bankruptcy Court in Houston.

Chapter 11 courts have the power to stay litigation against companies and people that aren’t in bankruptcy themselves, if doing so would help a continuing reorganization. Warren Burns, an attorney pressing claims against the Limetree Bay facilities, said Monday his clients would oppose extending the bankruptcy stay to defendants other than the refinery.

“The bankruptcy code was never intended to shield robber barons from liability for their personal actions,” he said. “My advice to defendants: If you want a bankruptcy stay, put your assets into the hopper and declare insolvency so that the people of St. Croix can clean the oil off their homes and protect their children. Otherwise, prepare for trial.”

While the terminal is still operating and hasn’t filed for bankruptcy, the refinery faces an uncertain future. EIG and other investors poured $4.1 billion into repairs and improvements at the refinery since 2015, when it emerged from a previous chapter 11 filing.

Now bankrupt a second time, the refinery owes roughly $1.6 billion, some of it to EIG, and is drawing on an emergency loan to cover payroll and comply with government directives.

Any reopening of Limetree faces a steep uphill climb after federal authorities last month labeled it an “imminent and substantial danger to public health and the environment.”

Write to Andrew Scurria at Andrew.Scurria@wsj.com

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By Andrew.Scurria from The Wall Street Journal -WSJ

wsj.com 12 06 2021

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