Limetree Bay and J. Aron make peace, but bankrupt lenders are skeptical

The Limetree Bay oil refinery facilities are seen in St Croix, U.S. Virgin Islands, June 28, 2017, as owned by Hovensa. REUTERS / Alvin Baez

(Reuters) – The bankrupt Limetree Bay refinery has reached a deal with Goldman Sachs energy trader J. Aron & Company to resolve disputes over some pre-bankruptcy deals, but the lenders who provided the financing for Limetree bankruptcy may not yet agree to the deal.

The company, represented by BakerHostetler, said in court papers that J. Aron agreed to pay about $ 8.4 million to fix the issues. But an attorney for Sentinel LLC, the lenders’ agent who provided the $ 25 million bankruptcy financing, told a virtual hearing before U.S. bankruptcy judge David Jones in Houston on Friday that they had concerns. problems with certain terms of the agreement.

Limetree filed for bankruptcy in July, seeking to restructure nearly $ 2 billion in debt. Lenders led by Arena Investors provided the $ 25 million loan to fund operations during the bankruptcy.

Sentinel had said in court documents that the U.S. Virgin Island refinery triggered a default on the bankruptcy loan earlier this month when it missed a $ 5 million payment. Sentinel alleged that J. Aron was supposed to transfer $ 18 million to Limetree upon the liquidation of certain assets of Limetree, although J. Aron disputes that it was subject to such an obligation.

J. Aron and Limetree were parties to supply agreements and J. Aron provided inventory financing to Limetree prior to the bankruptcy. The settlement amount resolves the obligations that Limetree still owed J. Aron under the financing agreement.

Sentinel stated that Limetree did not make the payment of the bankruptcy loan because J. Aron did not deliver certain products following the liquidation of certain products related to the supply agreements.

But J. Aron said in court documents that Limetree’s failure to make a payment on his bankruptcy loan was his own fault, saying he overestimated the amount he would collect from J. Aron’s. here the week of October 15, when payment was due.

A hearing on the deal is set for November 3 before Jones.

Jason Brookner of Gray Reed, representing the bankrupt lenders, said during Friday’s hearing that his clients felt there were “inappropriate” aspects to the deal with J. Aron and that the lenders could file a claim. objection. He also called the related legal fees “unreasonable and exorbitant.”

In addition to the J. Aron deal, Limetree made an effort to refine the offers received during the bankruptcy. Limetree’s attorney Elizabeth Green said on Friday the company had received “a number” of offers. Reuters reported on Friday that potential bidders could be accused of newly discovered groundwater contamination.

Limetree has filed for bankruptcy protection after investors spent $ 4.1 billion in an unsuccessful effort to revive the aging facility, which was shut down in May by U.S. environmental regulators. A first restart was abandoned after its smokestacks spit oil on homes and contaminated drinking water.

The case is In re Limetree Bay Services LLC, United States Bankruptcy Court, Southern District of Texas, No. 21-32351.

For Limetree: Elizabeth Green, Jorian Rose and Jimmy Parrish of BakerHostetler

For J. Aron: Robin Spigel from Baker Botts

For Sentinel and Arena: Jason Brookner, Paul Moak and Lydia Webb from Gray Reed and John Melko and Michael Riordan from Foley & Lardner

Read more:

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