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HomeNewsLocal newsJudge Approves Sale of Limetree Refinery to West Indies Petroleum

Judge Approves Sale of Limetree Refinery to West Indies Petroleum

A judge in Houston, Texas, on Tuesday approved the sale of the shuttered Limetree Bay Refinery to West Indies Petroleum following a day-long online hearing. The Jamaica-based company bid $62 million for the facility, with plans to reopen it.

St. Croix Energy bid $57 million and is the backup-bidder should West Indies be unable to close the transaction by the Jan 21 deadline.

Bankruptcy Judge David R. Jones listens to testimony Tuesday. (Screenshot)

Chief Judge David R. Jones of the U.S. District and Bankruptcy Court for the Southern District of Texas told the lawyers and other interested parties gathered online that he found the West Indies bid was “the highest and best” offer for the facility on the south shore of St. Croix.

Throughout the day, attorneys took testimony and argued whether the auction should have been reopened and whether West Indies had operated in good faith.

West Indies had gotten involved after the original auction had closed and St. Croix Energy declared the winner. At the request of the debtor committee representing Limetree, the auction was reopened after the Jamaican company said it had been unable to participate due to a serious medical emergency that required its CEO, Charles Chambers, to undergo open-heart surgery. Jones granted that request at a hearing on Dec 6.

Attorney Gregg Galardi, representing St. Croix Energy, raised questions about the timing of the surgery and the first auction. Chambers testified that he had been at the Mayo Clinic in Minnesota undergoing tests on Nov 12, which was the deadline for submitting documents to take part in the auction scheduled for Nov 15. On Nov 12, he was told it was essential he have heart surgery, which he did on Nov 15.

Galardi and other attorneys opposing the sale of the refinery to West Indies said that indicated he could have filed the appropriate documents on time.

But Jones was unswayed, saying, “Having heard all the evidence, I am more convinced than ever that reopening the hearing was the right thing.”

There were also questions about the involvement of David Roberts, president of Excel Construction, in the West Indies Petroleum Bid.

Roberts had been involved with the Unsecured Creditors Committee, and then the company he owns is owed a sizable debt by Limetree. But during the process, he withdrew from the committee and ended up supplying a portion of the cash for the West Indies bid.

Jones said the record and Tuesday’s testimony showed Roberts had done exactly the right thing. “Mr. Roberts did exactly as he should have done,” the judge said. “As soon as he realized he had an interest, he resigned from the committee.”

Jones said there had been no evidence that Roberts had obtained any insider information or that he had he used his position as a one-time committee member in any improper way.

There were also questions about the potential structure West Indies would create to manage the refinery. West Indies Petroleum is a Jamaica-based corporation, which is owned almost entirely by West Indies Petroleum of St. Lucia. Similarly, there is a company formed to take control of the facility, called at first St. Croix Refining and Transportation, but renamed Port Hamilton Refining and Transportation. Attorneys opposing the sale to West Indies group pushed Chambers on whether the funding would come from St. Lucia or Jamaica interests, whether the Jamaican shareholders had met to authorize a stock sale to raise the money and other details.

Lawyers gather online Tuesday to argue the sale of the Limetree Bay refinery to Jamaica-based West Indies Petroleum. Among those pictured are Judge David Jones, upper left, and West Indies Petroleum CEO Charles Chambers, bottom row right. (Screenshot of online meeting)

In the end, Jones said he was unmoved by arguments about the structure.

Noting that before taking a seat as a bankruptcy judge, he had been involved in business law, he said, “It doesn’t surprise me the structure is continuing to evolve and probably will continue to evolve. There is no evidence of inappropriate behavior.”

Michael O’Hara, the chief restructuring officer for the Limetree case, testified that his evaluation of the bids was influenced by more than just the fact that West Indies Petroleum bid some $5 million more than St. Croix Energy.

Chief among those factors was that the West Indies Petroleum bid was for both the refinery and the land it stands on. St. Croix Energy’s initial bid was only for the facility, leaving the land – and the possible liability – in the hands of Limetree, O’Hara said.

He further testified that his examination of West Indies’ financial wherewithal left him convinced that the company would be able to complete the transaction.

At the end of the day Jones, who had granted the reopening of the auction in the first place, announced he was more certain than ever that he had made the correct decision and said he found no reason to dispute the financial officials who had determined West Indies’ bid had been the best one. Jones said O’Hara’s opinion was an important factor.

“I’ve had prior occasions to watch Mr. O’Hara. I trust him. I’ve never seen him stretch a point,” the judge said, “The money is secondary to him; his goal is to get it right.”

With that, Jones ruled in favor of the request to approve the sale. The transaction is scheduled to be completed by Jan. 21.

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