A U.S. Bankruptcy Court judge has approved the $252 million sale of the Philadelphia Energy Solutions (PES’) refining complex in South Philadelphia, Pennsylvania, to a Chicago, Illinois-based developer.
The sale to Hilco Redevelopment Partners is expected to be the end of 150 years of oil-refining activities in Philadelphia.
Also approved as part of PES’ Chapter 11 reorganization is a $29 million settlement with the company’s unsecured creditors that includes a $5 million severance fund for former refinery workers.
“The Plan is approved in its entirety and Confirmed under section 1129 of the Bankruptcy Code,” the order from District Court Judge Kevin Gross states in his 80-page order (reviewed by Kallanish Energy).
PES filed for bankruptcy last July, one month after an explosion and fire destroyed parts of the 1,300-acre refinery complex. A week after the fire, the company shut down operations and laid off roughly 1,000 workers. The 335,000-barrel-per-day refinery was the largest oil refinery on the U.S. East Coast.
Hilco offered $252 million for the complex, according to PES lawyers, representing the highest bid and the best opportunity for creditors to recover their claims, WHYY radio reported.
“I’m very much satisfied that the sale to Hilco is the highest bid and sale,” Gross told WHYY. “Clearly is in the best interest of the community as well, given the risks that were attended to the prior operations with the refinery, and a refinery frankly that had numerous and repeated problems over the years. And I see no reason to think that that wouldn’t have continued.”
Initially objecting to the sale were PES’ unsecured creditors, including the United Steelworkers union, which represented about 600 former refinery workers. They argued the backup bidder, Industrial Realty Group, in partnership with former Philadelphia Energy Solutions CEO Phil Rinaldi, offered $25 million more than Hilco and an opportunity to restart refining operations and bring union workers back.
But PES said Hilco’s bid still was “deemed superior,” WHYY reported. Those differences were settled with the $29 million agreement, with $5 million going to former refinery workers.
Environmental leaders who have fought for a cleaner use of the site applauded the judge’s decision. “After over a century and a half of endangering the health of residents and the environment, this decision means a permanent end to the city’s largest industrial source of harmful air pollutants and climate pollution,” Clean Air Council director Joseph Otis Minott said, in a statement.
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