Limetree Bay Refining gets OK of settlement with St. Croix Energy

By Sarah Lizee

Olympia, Wash., April 25 – Limetree Bay Refining, LLC secured court approval of a settlement with stalking horse bidder St. Croix Energy LLLP, according to a minute entry filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

The settlement agreement provides that the debtors will pay to St. Croix $1 million in bid protections, plus $215,000, as previously reported.

The company closed the sale of its assets to winning bidders West Indies Petroleum Ltd. and Port Hamilton Refining and Transportation, LLLP for $62 million in January.

The company had initially identified two potential going-concern bidders, St. Croix Energy and West Indies Petroleum, and worked with the entities to qualify their bids prior to an auction.

However, Limetree was unable to designate West Indies Petroleum as a qualified bidder prior to the original auction, mainly due to the failure to pay the requisite deposit, which ultimately left St. Croix Energy without a competing going-concern bid.

Limetree said that due to its severe liquidity issues, which necessitated an unusually expedited sale process, it proceeded with the auction and, ultimately, designated St. Croix Energy as the winning bidder.

The company later said it learned that West Indies Petroleum’s initial failure to pay the requisite deposit before the bid deadline resulted from a medical emergency that incapacitated West Indies Petroleum’s chief executive officer on the eve of the bid deadline, leaving it unable to formally qualify as a bidder or participate in the auction.

The CEO was the only person at West Indies Petroleum who had enough knowledge of the proposed refinery transaction and sale process and was the only person who could authorize a deposit or execute an asset purchase agreement, Limetree said.

West Indies Petroleum approached the debtors in the hopes of formally presenting its offer on terms more favorable than those under the St. Croix Energy bid. The company then sought to reopen the auction.

“Due to the sudden and unforeseen medical emergency, which occurred just before the bid deadline, the initial failure of WIPL to provide a deposit and executed asset purchase agreement was clearly the result of extraordinary circumstances beyond the control of WIPL or the debtors and, at worst, excusable neglect,” the company said in a motion.

According to the sale approval order, St. Croix Energy’s $57 million bid was named backup bid. If West Indies Petroleum and Port Hamilton Refining had been unable to close the sale in time, St. Croix would have been deemed the winning bidder.

St. Croix Energy later filed an appeal to the reopening of the auction and the sale order. Under the settlement, the appeal will be dismissed.

Limetree Bay is based in St. Croix, U.S. Virgin Islands, and is capable of processing around 200,000 barrels of oil per day. The company filed bankruptcy on July 12, 2021 under Chapter 11 case number 21-32351.

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