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Hovensa Bankruptcy Info

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jones_st.croix
(@jones_st.croix)
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If any of you are wanting to follow whats happening in the bankruptcy proceedings here is the offical page. https://cases.primeclerk.com/hovensa/Home-DocketInfo You can read everything that has been filed so far. Interesting stuff.

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Topic starter Posted : November 15, 2015 7:20 pm
rmb2830
(@rmb2830)
Advanced Member

I don't se anything revealing the results of the supposed auction that was to take place on November 10...and nothing on the internet. Has anyone heard or seen any info?

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Posted : November 15, 2015 7:52 pm
CruzanIron
(@cruzaniron)
Expert

We know that Monarch didn't bid.

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Posted : November 15, 2015 9:57 pm
jones_st.croix
(@jones_st.croix)
Advanced Member

Monarch's bid looks to be on Docket # 299.

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Topic starter Posted : November 15, 2015 11:23 pm
bobn
 bobn
(@bobn)
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Could the lawyers out there explain? Is Monarch really bidding almost 1.3 BILLION dollars? I thought they didn't bid.

https://cases.primeclerk.com/hovensa/Home-DownloadPDF?id1=MjE3Mjkz&id2=0

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Posted : November 15, 2015 11:39 pm
CruzanIron
(@cruzaniron)
Expert

The daily news had a story last week quoting their lawyer who said they did not bid.

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Posted : November 16, 2015 12:14 am
janeinstx
(@janeinstx)
Trusted Member

Monarch withdrew their bid after Lazard was informed by lawyer for the VI govt that the VI govt would never cooperate with them. No reason was given

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Posted : November 17, 2015 4:38 am
Beeski
(@beeski)
Trusted Member

Monarch's bid was for $40mil cash, the rest in promises and taken on liabilities....not cash. I would suspect the bankruptcy judge would have put their bid at the bottom of the pile.

My understanding is that VI Govt approval is not needed for the sale, only for any special tax deals with the new owner.

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Posted : November 17, 2015 9:29 am
beckyhartung
(@beckyhartung)
Advanced Member

Monarch was required to post 10% of their bid amount in an escrow account before bidding. The bid procedures required a minimum bid of something like $198m to bust arclights original bid, which had to be in cash, which presumably caused monarch to withdraw.

monarch wanted to invest $40MM as an initial first step in restarting the refinery. It could've worked and put more than a thousand people back to work, i do not know why this Government refused to meet with them.

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Posted : November 17, 2015 10:38 am
vicanuck
(@vicanuck)
Expert

Its seems obvious beckyhartung...if ArcLight has already made an initial all cash bid of $182 million, what compelling reason would the judge have to even consider a bid of $40 million and an IOU?

The judge's job is not to consider what the potential buyer plans to do with the property, only to ensure that the sale is conducted in an orderly fashion to the sole benefit of the creditors.

Monarch never had a shot and is just dreaming.

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Posted : November 17, 2015 11:10 am
Beeski
(@beeski)
Trusted Member

a little more detail in yesterday's Daily News:
http://virginislandsdailynews.com/news/marathon-hovensa-bankruptcy-auction-continues-today-1.1971990

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Posted : November 17, 2015 11:44 am
beckyhartung
(@beckyhartung)
Advanced Member

not sure that I agree. it seems as if the judge's role is to capture the most money for the estate to benefit the creditors. based on the sheer amount of secured debt, $200MM isnt gonna cut it and alot of creditors are gonna get cut out. it also seems like the $40MM was an initial cash injection to the estate with presumably more cash to follow. We really don't know what their proposal is, and neither does the Government, since they refused to find out...

the $1.3BB presumably was an assumption of the existing liabilities which would benefit ALL creditors.

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Posted : November 17, 2015 11:45 am
jones_st.croix
(@jones_st.croix)
Advanced Member

What none of these dockets has talked about that will come up today is the environmental liability. The EPA is listed as one of the interested parties in the hearing today. The only bid that addressed environmental liability was Monarch's. There are two options here one the liability will remain with Hess and PDVSA or it will become the USVI Government's problem if the bankruptcy doesn't address it. The VI Government is a creditor in this and it's in the best interest of the USVIG that the environmental liability is not transferred. What would we do with a cleanup that would cost 500 million plus? This is why I've always maintained an interest in Monarch acquiring the refinery. They are an environmental clean up and reprocessing company. It's what they do. http://monarchenv.com.ng/ How ever this turns out it's been a fascinating case to watch from a legal standpoint. Rarely do people come out on top in these cases, seems the companies receive the most benefit.

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Topic starter Posted : November 17, 2015 1:25 pm
vicanuck
(@vicanuck)
Expert

Lets not forget...Corporations are people too!

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Posted : November 17, 2015 1:54 pm
jones_st.croix
(@jones_st.croix)
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True! I just want to see jobs return to this island. We will see what happens

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Topic starter Posted : November 17, 2015 2:03 pm
beckyhartung
(@beckyhartung)
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jones: how does the environmental liability transfer to HESS/PDVSA? This case is in bankruptcy and the liabilities incurred by hovensa will be wiped out. Otherwise, why file?

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Posted : November 17, 2015 4:05 pm
jones_st.croix
(@jones_st.croix)
Advanced Member

From my understanding environmental liabilities cannot be removed by bankruptcy. The following will shed some light on the subject but is still not explicit on how a court might decide to handle it. http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1467&context=ilj The EPA will probably make a claim for clean up and it will be against the reorganized business, possibly the VI Government, other creditors, etc. Any monies made from the sale will probably end up in the hands of the EPA if they assume the clean up. Again there are a lot of variables in this especially since the storage portion is being broken up from the refinery. In the end the only people to collect could be the EPA and with the bid amount it won't begin to cover the actual cost of clean up.

My other main concern is whether or not the site could be run solely as a storage facility. From what I've heard the EPA permit is for a refinery and storage facility not solely for storage alone. Any business seeking to operate just a storage farm will probably have to go through the process of applying for a storage permit. I'm not sure how long that might take. Also, that will probably require the old permit to be relinquished to the EPA and then you would never have a refinery on the island again because at this point the EPA isn't issuing new Refining permits. The disclaimer on all this is that I'm just a person with interest in how legal proceedings happen. I have no formal education in law so take these thoughts as such.

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Topic starter Posted : November 17, 2015 5:07 pm
jones_st.croix
(@jones_st.croix)
Advanced Member

Actually here is a much simpler explanation of "cradle to the grave responsibility" and "long tail liability." http://www.enviroforensics.com/cradle-to-grave-responsibility-and-long-tail-liability/

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Topic starter Posted : November 17, 2015 5:15 pm
CruzanIron
(@cruzaniron)
Expert

Other than the 1% of oil remaining in the aquifer, what exactly do you all think there is to be 'cleaned up'?

The tanks, lines and units have all been cleaned of oil and residue and passed the EPA inspections. What do you think was going on there since April 2012?

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Posted : November 18, 2015 2:35 am
sttanon
(@sttanon)
Advanced Member

jones: how does the environmental liability transfer to HESS/PDVSA? This case is in bankruptcy and the liabilities incurred by hovensa will be wiped out. Otherwise, why file?

This has always been a gotcha with anyone EXCEPT for Monarch that has submitted a bid. People that have bid in the past have always had some sort of language in there that their bid is contingent on any liabilities with regards to the EPA mess being waved. I do hope that some how or another that the Monarch bid could be seriously looked at going forward as in looking at the documents they filed, they seem to be the only company that is serious about Hovensa and is willing to accept and be responsible for cleaning up the mess

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Posted : November 18, 2015 12:37 pm
Rowdy802
(@Rowdy802)
Trusted Member

ABR is accusing ArcLight Capital of "stealing their deal". @ page 3 of the Virgin Islands Daily News.

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Posted : November 18, 2015 12:54 pm
JohnnyU
(@JohnnyU)
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jones: how does the environmental liability transfer to HESS/PDVSA? This case is in bankruptcy and the liabilities incurred by hovensa will be wiped out. Otherwise, why file?

This has always been a gotcha with anyone EXCEPT for Monarch that has submitted a bid. People that have bid in the past have always had some sort of language in there that their bid is contingent on any liabilities with regards to the EPA mess being waved. I do hope that some how or another that the Monarch bid could be seriously looked at going forward as in looking at the documents they filed, they seem to be the only company that is serious about Hovensa and is willing to accept and be responsible for cleaning up the mess

Anybody willing to take on unlimited risk with limited knowledge is likely going to be out of business

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Posted : November 18, 2015 3:49 pm
singlefin
(@singlefin)
Trusted Member

ABR offered up a fund to clean up the entire property at the conclusion of their ownership. They were intrested in the entire operation, not just the port and storage facility.
ABR still made the best offer for the largest return over the long haul.

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Posted : November 18, 2015 7:23 pm
singlefin
(@singlefin)
Trusted Member

Rowdy802:
Can't find that ABR article in the Virgin Island Daily News on-line.
Any links available?

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Posted : November 18, 2015 7:30 pm
CruzanIron
(@cruzaniron)
Expert

Monarch is out of the bidding and ABR did not bid.

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Posted : November 18, 2015 7:50 pm
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