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Philadelphia Energy Solutions Files for Bankruptcy After Refinery Fire

Reuters, July 22, 2019
Reuters

Philadelphia Energy Solutions (PES) filed for Chapter 11 bankruptcy protection, the company said on Monday, its second such filing in less than two years, after a fire last month prompted it to close the largest refinery on the U.S. East Coast. After the June 21 explosions and fire, PES started shutting down the 335,000 barrel-per-day Philadelphia plant without a planned restart. Some 1,000 workers are being laid off.

The agreement “provides additional financing and liquidity necessary to ensure we can safely wind down our refining operations and... best position the company for a successful reorganization, the rebuilding of our damaged infrastructure, and a restart of our refining operations,” Mark Smith, chief executive officer of PES Energy, said in a statement.

“The success of our plan is critical to energy supply and security for the region, the Commonwealth of Pennsylvania and the City of Philadelphia,” Smith said.

The refinery has struggled financially for years, slashing worker benefits and scaling back capital projects to save cash. PES filed for bankruptcy in January 2018 to reduce debt, but cash on hand dwindled even after the company emerged from the process later in the year. The company has multiple owners, including investment bank Credit Suisse and investment firm Bardin Hill, and has both assets and liabilities between $1 billion and $10 billion, a filing made in U.S. Bankruptcy Court for the District of Delaware showed.

The company began selling the refinery’s oil supplies and equipment announcing it would seek to permanently shut the plant, sources have told Reuters. The asset sell-off triggered worries among workers that the company no longer aimed to find a buyer willing to restart the plant, as it had said it would do. The sale proposals included offers for future crude cargoes and time-chartered Jones Act vessels, sources had told Reuters.

More than 600 union refinery workers will be laid off on August 25. Others were let go shortly after the fire. Hundreds of contractors that do business with the refinery are also expected to be affected by the shutdown.

(Reporting by Laila Kearney, Jarrett Renshaw and Akshay Balan; Editing by David Gregorio)

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Copyright 2019 Thomson Reuters. Click for restrictions.

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