By:Michael A. Cibik
Philadelphia Energy Solutions (PES) filed for Chapter 11 bankruptcy protection, its second such filing in less than two years, after a fire prompted it to close the largest refinery on the U.S. East Coast. Following the June 21 explosions and blaze, 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 company’s lenders agreed to provide up to $100 million in new financing to PES to usher it through the bankruptcy. The agreement allows PES to safely wind down its refining operations and, with the support of its insurers and stakeholders, hopes to position the company for a successful Chapter 11 Bankruptcy reorganization, the rebuilding of its damaged infrastructure, and a restart of its refining operations.
The success of the reorganization plan is critical to energy supply and security for the region, the Commonwealth of Pennsylvania and the City of Philadelphia,
PES could receive payouts of $1.25 billion in insurance claims connected to the fire and business closure. The potential insurance payouts include $1 billion for property damage and $250 million for loss of business.
The insurance payouts were expected to be used as collateral for the new Chapter 11 Bankruptcy financing, PES also asked the Bankruptcy Court to allow it to continue making insurance payments. Its premiums cost about $1.4 million each month on 39 policies, according to filings with the U.S. Bankruptcy Court.
PES 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 Bankruptcy Court filings show.
Michael A. Cibik is a partner at the Philadelphia bankruptcy law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.
If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.
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