Bankrupt Philadelphia Refinery Expects Second Insurance Payment

By Laura Sanicola | December 16, 2019

Insurers of Philadelphia Energy Solutions (PES) have indicated they will make a second payment of $15 million from its property policy in connection to the June fire and subsequent shutdown of the plant, court documents showed.

The payout will be distributed among debtors who were insured under the company’s commercial property coverage policy, according to the documents.

Earlier this year, the insurers made an initial $50 million payment to the refiner, which is currently navigating Chapter 11 bankruptcy.

PES entered bankruptcy a month after a June 21 fire and series of blasts destroyed an alkylation unit at its massive refinery complex. Shortly after the blaze, the company requested an advance payment on $1.25 billion in property damage and business interruption insurance coverage, but it was denied.

The plant, which was the largest refinery on the U.S. East Coast, shut its last crude distillation unit in late July.

The refinery has since been put up for sale and has attracted interest from parties ranging from biofuels producers to real estate developers.

The company’s bankruptcy case hinges on receiving insurance proceeds for up to $1 billion for property damage and as much as $250 million for loss of business after the fire, according to earlier filings with the U.S. bankruptcy court for the District of Delaware.

Without the payouts, PES could be forced into Chapter 7 liquidation.

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