Limetree Bay Refining LLC said it expects to finalize and file a plan of liquidation in its Chapter 11 proceedings by Jan. 10, 2022. To provide it with time to do so, the company asked the bankruptcy court overseeing its Chapter 11 case to extend its exclusive right to file and solicit acceptances to a reorganization plan by 60 days, through Jan. 10, 2022, and March 11, 2022, respectively.
Meanwhile, late last week the company received another form of breathing room, saying in a court filing that its lender under its $25 million debtor-in-possession facility had agreed forbear from exercising its default-related rights under the DIP facility until Dec. 10, following payment of a $250,000 forbearance fee.
As reported, under the DIP the company was to repay its lenders $5 million the week of Oct. 11, $7.5 million the week of Oct. 18 and $12.5 million the week of Oct. 25. According to budgets submitted in the case by the company, that amortization schedule was premised on the expected receipt by the company of roughly $38 million from the liquidation of certain of the company's property by J. Aron & Co., a commodities broker and unit of Goldman Sachs, the agent under the company's pre-petition term loan and a lender to the company in its own name under a $25 million secured financing agreement entered into in 2020.
The expected initial payment of $18 million by Oct. 10 was not made, however, because J. Aron had not yet completed the liquidation of the property, leaving the company short of cash and causing a notice of default to be issued under the DIP on Oct. 15 after the company failed to make the initial amortization payment of $5 million.
Subsequently, the company entered into a settlement with J. Aron agreeing that the cash proceeds to the company from the property sale would be $8.6 million after repayment of the pre-petition financing agreement and certain other adjustments.
According to court filings, following the receipt of those funds the company made the first $5 million amortization payment on Nov. 8.
As for future payments, the company's budget shows it was expecting a second payment from J. Aron of $20 million by Oct. 24, but that payment has not been made. Instead, court filings from the DIP lender, Arena Investors, state that the liquidation proceeds paid to date by J. Aron do not include $20 million that was expected from the sale of certain catalyst materials used in the oil refining process but that the materials are held by the company and "would presumably be sold as part of a going concern sale or liquidation."
The company filed for Chapter 11 on July 12 in the wake of environmental violations at the company's refinery in St. Croix in the U.S. Virgin Islands that required it to indefinitely suspend operations at the facility. The company said that as a result it was unable to obtain financing to fund either the repairs or the idling of the refinery and was forced to file Chapter 11, obtaining the $25 million DIP facility to maintain the idled refinery during the proceeding.
The company said at the time of the filing that it "intends to use the Chapter 11 process to engage in discussions with its lenders, creditors, equity owners and others to evaluate options to maximize the value of the estate and recoveries for stakeholders, including exploring a potential sale of its assets." Shortly after, the company said it would seek to sell its assets.
The status of those sale efforts is unknown. According to local media reports published in late October, the company's attorneys said at a court hearing that the company has received some bids but that potential purchasers were concerned about the regulatory risk surrounding the company's refinery, which has been closed and is the subject of complaints from the Environmental Protection Agency.
In any event, an auction, if needed, is slated to be held Nov. 12, and the deadline for the company to designate a winning bid is Nov. 15. A hearing to approve a sale is set for Dec. 3, and the deadline for the winning bidder to close on the transaction is Dec. 10 (Dec. 13 for the backup bidder).
