Oil Hardens in Pipelines, Homeowners Affected by Flare Incident Neglected as Limetree Refinery Runs Out Bankruptcy Funding

A group of St. Croix residents living downwind from the Limetree Bay Refinery reached out to the Consortium recently to express frustration. They had signed a release document that precluded them from suing Limetree in connection with a May 12 massive flare incident which propelled large plumes of smoke mixed with oil droplets west of the island. In turn, the refinery promised to pay those individuals a sum of money, clean their roofs and cisterns, and to provide them with clean, drinkable water until the cisterns are cleaned.

Fast forward five months later, Limetree Bay has since filed for bankruptcy and received a $25 million debtor-in-possession (DIP) financing that included funds to remove the remaining oil from the refinery's pipelines, as well as addressing its debts. Among the obligations are the St. Croix residents who signed release documents with the refinery. Almost 2,000 release documents were signed, and the firm has reportedly provided less than 100 checks.

Attorney Lee Rohn, representing hundreds of clients who did not sign the Limetree Bay Refinery release, said a portion of the $25 million in funding should have gone to homeowners.

"The DIP money was to give the refinery the ability to pay its bills, and clearly continuing to provide water and cleaning people's roofs and cisterns is an obligation they entered into releases to pay which they haven't paid. And so yes, a portion of that money should have gone to those expenses," Attorney Rohn told the Consortium Thursday.

While the agreements with locals remain unaddressed, professionals hired to manage the bankruptcy process are expected to be paid handsomely out of the $25 million DIP, according to documents obtained by the Consortium. Riveron RTS, LLC, an advisor representing the Official Committee of Unsecured Creditors such as contractors who worked at the refinery, has submitted a bill of $721,000 for services that commenced at the end of July and ended Sept. 30. Pachulski Stang Ziehl & Jones LLP, counsel to the Official Committee of Unsecured Creditors, has submitted a $802,000 bill for services which started at the end of July and ended Sept. 30. Baker & Hostetler LLP, an attorney group representing Limetree Bay Refinery submitted $2.4 million in fees for services that commenced mid-July through Sept. 30. B. Riley Advisory Services, the chief restructuring officer, has submitted a bill of $1.2 million.

Funding for these bills from the DIP are expected be approved by the bankruptcy court Judge David Jones, as historically such bills are greenlighted with little to no resistance from judges.