Limetree Bay disclosure statement conditionally OK’d; plan hearing set

By Sarah Lizee

Olympia, Wash., April 5 – Limetree Bay Refining, LLC received conditional approval of the disclosure statement for its amended Chapter 11 plan of liquidation, according to a minute entry filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The combined hearing on final approval of the disclosure statement and confirmation of the Chapter 11 plan is scheduled for May 11.

As previously reported, on March 30, judge David R. Jones directed the company to show cause for why its bankruptcy case shouldn’t be converted to Chapter 7 at a hearing scheduled for Tuesday. Jones had said that while conversion wouldn’t be his preferred course of action, the plan was “problematic in several areas.”

However, in court documents filed late Sunday, the company said the debtors, the official committee of unsecured creditors and the prepetition secured lenders had resolved all material or monetary disputes with respect to the plan. An amended plan was filed shortly before Tuesday’s disclosure statement hearing.

In addition, the committee agreed to withdraw its previous motion seeking dismissal of the case.

The plan was modified so that avoidance actions against post-petition vendors will not be preserved, and avoidance actions with potential exposure of less than $100,000 against vendors of the debtors will not be preserved.

It was also modified to require the prepetition secured parties to either obtain final court approval of any super-priority administrative claims permitted under the final debtor-in-possession order prior to the effective date or waive and release any super-priority administrative claims against the estates and their assets, including available sale proceeds.

Limetree said the amended plan serves the best interests of the estates and its creditors because it preserves the principal assets of the estates, preserves the administration of the estates to date, including as much as possible of the $62 million sale of the debtors’ principal assets, and establishes a streamlined transition of the administration of the debtors’ assets to a liquidating trust.

The plan also ensures the feasibility of the proposed liquidation by providing up to $1.25 million in initial funding and carve-outs for administrative expenses of the liquidating trust, which amounts shall be funded by the cash collateral of the company’s revolving facility lenders.

Holders of other priority claims will receive payment in full in cash.

Holders of prepetition revolver secured claims will receive their pro rata share of all available sale proceeds, and class A1, B1, B2, B3, C1 and C2 liquidating trust units.

Holders of prepetition term secured debt claims will receive their pro rata share of class A2, B2, B3 and C2 liquidating trust assets.

Holders of other secured claims will receive the collateral securing their claims or cash equal to the amount of their claims.

Holders of general unsecured claims will receive their pro rata share of the class B3 and C2 liquidating trust units.

Holders of governmental fine and penalty claims will receive their pro rata share of the class B4 and C3 liquidating trust units.

Holders of prepetition holdco secured debt claims will receive their pro rata share of class B5 and C4 liquidating trust units.

Equity interests and intercompany claims will be canceled with no distribution.

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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