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PES Holdings (a/k/a Philadelphia Energy Solutions) Prepackaged Bankruptcy

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Privately-held PES Holdings (a/k/a Philadelphia Energy Solutions) and eight affiliated Debtors, including Philadelphia Energy Solutions Refining and Marketing, filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 18-10122. The Company, which engages in the refining of crude oil and other feedstocks into petroleum products, is represented by Laura Davis Jones of Pachulski Stang Ziehl & Jones.

Concurrent with its Chapter 11 petition, the Company also filed a Joint Prepackaged Chapter 11 Plan of Reorganization and related Disclosure Statement. The Disclosure Statement explains, “In the months and years leading up to their decision to seek relief under chapter 11 of title 11 of the United States Code (the ‘Bankruptcy Code’), the Debtors faced a number of economic hurdles. The Debtors have fallen victim to regulatory compliance costs that specifically penalize independent merchant refiners like the Debtors, adverse macroeconomic trends in the energy sector, and adverse government policy decisions….[T]he Plan is the result of many months of negotiations among the Debtors and the Restructuring Support Parties, with all parties working towards an outcome that will provide near-term liquidity to the Debtors while maximizing the value of the Debtors’ estates for the benefit of all stakeholders….Crucially, in addition to agreeing to exchange a substantial portion of their claims for equity in the reorganized company, the Consenting Term Loan B Lenders have agreed to invest of $120 million of permanent capital in the Debtors, which will be provided in the form of debtor-in-possession financing and will convert to Tranche A of the New First Lien Term Loan Facility upon exit. In total, The Plan will provide for an infusion of approximately $260 million in capital to the Debtors, reduce the Debtors’ anticipated debt service obligations by approximately $35 million per year, and relieve the Debtors of debt maturities through 2022. While the Debtors reserve the option to pursue a standard reorganization transaction, the Debtors intend to sell all of their assets to the Purchaser (as defined in the Plan) and, in connection with Confirmation of the Plan, to ask the Bankruptcy Court to make a customary ‘free and clear’ finding for the benefit of the Purchaser with respect to the outstanding RIN Liabilities (as defined herein) pursuant to section 363(f) of the Bankruptcy Code.”

 

Philadelphia Energy Solutions is the non-Debtor parent of PES Holdings. PES Holdings is the parent of all subsidiaries that filed, including Philadelphia Energy Solutions Refining and Marketing. PES Holdings’ Chapter 11 petition indicates assets of $1 to 10 billion.

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