The U.S. Virgin Islands filed a $1.5 billion lawsuit against Hess on Monday, claiming that the New York based company abandoned an oil refinery nearly a decade before its contract was set to expire.
According to the St. Croix Source, the island alleges that Hess violated the Criminally Influenced and Corrupt Organizations Act when it shuttered the refinery in 2012, about ten years before its contract’s 2022 expiration date.
The island also alleges that Hess conspired to strip assets from the refinery prior to shutting it down, the AP noted.
“We believe this suit is wholly without merit,” a Hess spokesperson told the news wire.
Hovensa, a joint venture between Hess and Venezuela’s PDVSA, manages the refinery and announced on Monday that it will file for Chapter 11 bankruptcy.
Washington D.C. based firm Cohen Milstein Sellers & Toll PLLC will represent the island and also fund the suit, the AP said.
The law firm is slated to collect between 20 to 28 percent of any proceeds.
Hovensa stopped operating the facility as a refinery in January 2012 following three years of losses totaling about $1.3 billion.
“HOVENSA explored all available options to avoid this outcome, but severe financial losses left no other choice,” the Hovensa said in a statement provided to the St. Croix Source.
The company laid off its remaining 101 employees and 69 contractors in March as it prepared to shut down the facility, the Virgin Island Daily News said.
Limetree Bay Holdings has agreed to buy all of Hovensa’s terminal assets for $184 million after the bankruptcy is concluded.
The firm, a subsidiary of Boston-based private equity firm ArcLight Capital Partners, plans to use the assets as a storage facility that will have an operable capacity of 15 million barrels, Platts said.
Other parties will be able to submit competing offers for the refinery’s assets and a federal judge will ensure the “highest and best” offer wins, Hovensa added.