Glencore wins court approval for $236 million UK refinery claim

Traders Union
All News
Financial News
Glencore wins UK refinery claim

Highlights

London's High Court allows Glencore to pursue a $236 million lawsuit against the liquidated Prax Lindsey Oil Refinery Ltd for crude oil or its proceeds.
Glencore alleges fraudulent misrepresentation by former Prax CEO Winston Soosaipillai, involving a £738 million securitisation facility and at least £334 million of fictitious invoices.
Phillips 66 acquired the 113,000-barrel-per-day Lindsey refinery's assets earlier this year, highlighting significant restructuring impacts in the UK refining sector.

High Court clears claim against Lindsey refinery

As reported by Reuters, the High Court in London rules on Monday that Glencore can bring a lawsuit against Prax Lindsey Oil Refinery Ltd, despite the company being in liquidation. Glencore is seeking to recover crude oil it says Prax still holds, or the traceable proceeds from any oil that has already been refined.

The London-listed commodities trader says it supplied the crude before Prax's collapse and is now trying to recoup losses from last year's demise of the refinery operator. Because the company is being liquidated, Glencore needed the court's permission to proceed with the claim.

The Official Receiver, which is handling the liquidation of Prax Lindsey Oil Refinery Ltd, opposes the application, but Judge William Trower grants permission. In his ruling, Trower says Glencore may face difficulty tracing crude that has already been refined, but adds that the company has a seriously arguable case that it will be able to trace at least some of the assets.

Fraud allegations deepen fallout for UK refining sector

The lawsuit also focuses on the conduct of former Prax chief executive Winston Soosaipillai, whom Glencore alleges fraudulently misrepresented the refinery's financial position. Glencore argues it continued supplying crude as the refinery's exclusive supplier on the basis of those alleged misrepresentations.

Soosaipillai is also alleged to have been involved in an extensive fraud linked to a 738 million pound securitisation facility, including the alleged sale by Prax companies of at least 334 million pounds of fictitious invoices. Lawyers representing Soosaipillai say they have no comment, while he says in a June statement to the Financial Times that he has always acted in good faith and that allegations of dishonesty are untrue and offensive.

The case adds to the restructuring aftermath around the 113,000-barrel-per-day Lindsey site in northern England. Earlier this year, U.S. refiner Phillips 66 buys the refinery's assets after a prolonged sale process, underscoring the wider commercial significance of the insolvency for the UK refining and petrochemical market.

Our earlier coverage of Carlyle’s proposed acquisition of Lukoil’s overseas oil portfolio explained that U.S. approval delays left a sizable part of Europe’s refining system underutilized despite high fuel prices. We noted the deal could potentially bring an extra 100,000–150,000 barrels a day of refining capacity online, but sanctions-related licensing extensions and ongoing inter-agency review kept the restart timeline uncertain.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.