BY Fraser Tennant
Largely as a result of low market demand for renewable diesel, environmental services company Vertex Energy has filed for Chapter 11 bankruptcy in order to facilitate transactions contemplated under a restructuring support agreement (RSA).
With the overwhelming support of 100 percent of its term loan lenders, Vertex has filed customary first day motions and plans to operate its business in the ordinary course as it explores a holistic restructuring strategy pursuant to the terms of the RSA.
To fund this process and continue operating in the ordinary course, the term loan lenders have agreed to provide Vertex with an additional $80m debtor-in-possession financing facility subject to certain terms and the satisfaction of certain conditions. In addition, Vertex has also filed a Chapter 11 plan and bidding procedures, and anticipates confirming its Chapter 11 plan by the end of the year.
“As we enter this next phase of our restructuring process through a formal proceeding, we are appreciative of the continued support from our lenders,” said Benjamin P. Cowart, president and chief executive of Vertex. “Their confidence in our business, as demonstrated by this ongoing collaboration, reinforces the critical role Vertex plays in the specialty refinery space.”
A leading energy transition company that specialises in producing high-quality refined products, Vertex Energy’s innovative solutions are designed to enhance the performance of its customers and partners while also prioritising sustainability, safety and operational excellence.
In April 2022, Vertex completed the acquisition of Shell’s 90,000 barrels a day refinery for a cash consideration of $75m plus the value of the refinery’s hydrocarbon inventory and other accrued liabilities.
However, Vertex’s ambitions in the renewable space proved to be out of kilter with the current realities of market demand for renewable diesel and, in May 2024, the company announced it would be ‘pausing’ the production of this product.
Serving as restructuring counsel to Vertex is Kirkland & Ellis, with Bracewell LLP serving as restructuring co-counsel. Perella Weinberg Partners is serving as investment banker, and Alvarez & Marsal is serving as chief restructuring officer (CRO) and financial adviser.
Seth Bullock, a managing director at Alvarez & Marsal and Vertex’s CRO, concluded: “We have gained significant momentum with the partnership of Vertex’s lenders over the last several months and believe the restructuring support agreement and related milestones will allow the company to initiate a fresh start and improve long-term value as it singularly concentrates on strengthening its foundation for continued growth and stability.”