The sale of the bankrupt Limetree Bay Refinery to West Indies Petroleum has closed, according to a notice filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.
The official word from Elizabeth Green, the lead bankruptcy counsel for Limetree, ends the long-running saga of the refinery that was presumed sold at auction to St. Croix Energy in November for $20 million, only to have bidding reopened in December when West Indies Petroleum appealed that decision, saying its chief executive had intended to participate but was unable to when he needed emergency medical care.
Jamaica-based West Indies Petroleum prevailed at the second auction on Dec. 17 with a joint bid of $62 million with Port Hamilton Refining and Transportation, and St. Croix Energy was declared the backup-bidder at $57 million.
St. Croix Energy sought to delay the sale while it appealed the decision to reopen the auction but was denied, first by Judge David Jones, who oversaw the bankruptcy case, and again on Friday by Chief U.S. District Judge Lee H. Rosenthal for the Southern District of Texas.
However, with a sale deadline of Friday, West Indies Petroleum hit a glitch wiring the funds to close the deal and the court extended the deadline to Monday. According to Limetree’s emergency motion seeking the extension, $50,599,895 of the purchase price had been received, but the remaining $11,480,720 was in transit.
On Tuesday, attorney Green filed notice that the sale had closed.
According to the court order authorizing the sale, West Indies Petroleum will pay the $7.5 million debt owed to the V.I. government under its Refinery Operating Agreement of July 2018 with Limetree Bay Refining, LLC.
The V.I. government had filed a limited objection to the sale on Jan. 11 until it was assured it would receive the outstanding quarterly payments it said it was owed under the operating agreement.
West Indies Petroleum said in a press release on Jan. 8 that it will restart the refinery on the south shore of St. Croix with a focus on environmental responsibility and a plan to eventually double production to 450,000 barrels of oil a day.
However, it still will have some hurdles to overcome with the U.S. Environmental Protection Agency. The EPA, through the U.S. Justice Department, filed a limited objection to the sale in December, “to ensure that no one after the sale argues that an order from this court in any way limits applicable environmental law.”
The 1960s-era refinery encountered numerous problems following its restart by Limetree after being shuttered since 2012 by former owner Hovensa, which declared bankruptcy in 2015 while under a consent decree. Limetree purchased the sprawling plant in 2018, with hopes of restarting by the end of 2019.
Instead, the refinery resumed production in February 2021 and five months later was ordered shut down by the EPA for 60 days after multiple major incidents resulted in significant toxic emissions affecting scores of neighboring properties. In June, Limetree announced it was closing indefinitely, and in July declared bankruptcy after reportedly investing some $4 billion in the restart.
That same month the U.S. Justice Department filed a complaint in V.I. District Court alleging “an imminent and substantial danger to public health and the environment” from the refinery.
In its limited objection to the sale in December, the department sought to ensure its authority to enforce any environmental regulations with West Indies Petroleum, noting that the 2011 consent decree with Hovensa, among other things, “would bind successor owners of the refinery.”
“The United States believes it is near an agreement concerning sale order language with West Indies Petroleum, but it also does not believe it will reach an agreement by the sale objection deadline,” the filing said. “In the event, the parties cannot reach an agreement before a sale hearing, then the United States requests that the Court make clear in a sale order that any obligation in the Consent Decree, as modified and in the joint stipulation presented to the District Court for the Virgin Islands in the 2021 lawsuit are not adversely impacted by an order from this Court.”
In December, St. Croix Magistrate Judge George Cannon Jr. granted a joint request by the Justice Department and Limetree to stay all deadlines in the civil complaint until Feb. 21 and ordered them to file a joint status report by Friday.
According to that report, the refinery’s petroleum process units remain idled, and steps to purge hydrocarbons from those units for an indefinite shutdown, while initiated, have not resumed due to financial constraints. Likewise, the third phase of the shutdown plan also “remains on hold due to financial constraints. The Parties do not expect Phase 3 to resume until after the close of the sale transaction,” the report stated.
However, “the five sulfur dioxide and five hydrogen sulfide ambient air monitors that Limetree Bay obtained in early October have been installed and are operational. Limetree Bay has made air monitoring data available to EPA in real-time,” according to the report.