Corporatism, Featured Post — September 21, 2019 at 10:35 am

Philly refiner pays out nearly $5 million in bonuses, then declares bankruptcy throwing over 1,000 people out of work


On June 21st of this year, an explosion rocked the Philadelphia Energy Solutions oil refinery in Philadelphia causing a massive amount of damage to the facility. The gigantic fire ball was captured on video by @1NiceTownBean:

This explosion was the second mishap in a month for PES. Fire fighters responded to another fire on June 10th. This facility, which is the 10th largest refinery in the country and the largest on the east coast, is particularly dangerous because it had around 340,000 pounds of hydrofluoric acid (HF) on the premises. HF is incredibly dangerous and can create a fatally toxic cloud of vapors when it comes into contact with water or water vapor, even at room temperature. In fact, HF is so deadly that union members have been working to end its use in refining:

The United Steelworkers union (USW), whose members work at major refineries, launched a campaign in 2010 to end the oil industry’s use of HF. In 2013, the USW found 26 million people in the United States were at risk of HF exposure from a refinery accident.

The site is also considered a “corrective action site” for clean up by the U.S. Environmental Protection Agency due heavy contamination with hydrocarbons and lead.

According to Reuters, after the June 21st explosion, the company “immediately began laying off many of its 1,100 employees without severance pay or health insurance coverage.” Two weeks later, the company paid out around $4.5 million in retention bonuses to around a half dozen of its top executives. Then, two weeks later, it filed for bankruptcy.

Chief Executive Officer Mark Smith received a $1.545 million retention bonus, the largest sum handed out to company executives, according to documents filed on Friday with the Bankruptcy Court for the District of Delaware.

Attorney John McShane received $875,500, Chief Financial Officer Rachel Celiberti was given $721,000 and deputy staff attorney Anthony Lagreca made $450,000. Refinery manager Daniel Statile, who had been on the job since March, was paid $325,000.

Additional spot bonuses, including a $75,000 payout for Celiberti and $50,000 for Lagreca, were made on the day of the June blaze.

The company’s board of directors was not awarded bonuses, but there were other payouts, including a $772,5000 initial payment for annual consulting duties to Director Mark Cox on July 2.

The last crude distillation unit at the PES refinery, the oldest and largest on the East Coast, was taken offline in late July.

Last month, after hundreds of workers had already been dismissed, most of the refinery’s 640 union members of the plant were also let go.

This isn’t the first bankruptcy for PES. They filed for bankruptcy just a year and a half before in January of 2017, as well:

The Philadelphia refinery is no stranger to bankruptcy court. PES Energy filed for Chapter 11 protection in January 2018, blaming “skyrocketing costs” to comply with the EPA’s Renewable Fuel Standard, a rule aimed at lowering pollution that requires refiners to either blend oil with renewable fuels or buy credits.

PES Energy emerged from bankruptcy in August 2018 after successfully restructuring $635 million of debt. The refinery struck an optimistic tone about its future following the restructuring and reported $149 million in cash on hand.

A former CEO of PES, Philip Rinaldi, is among those showing interest in purchasing the 1,300-acre site with an eye toward redeveloping it. Because Philadelphia’s Office of Sustainability’s Clean Energy Vision is working to reduce the city’s carbon pollution by 80 percent (from 2006 levels) by 2050, Rinaldi has included a renewable energy component to his proposal:

Rinaldi’s new company, Philadelphia Energy Industries (PEI), would restart the refinery as a conventional fuel-manufacturing facility. But it has also entered into a cooperation agreement with RNG Energy Solutions, a company that announced plans last year to build a $120 million digester that can convert more than 1,100 tons of food waste a day into renewable methane gas.

In addition to producing renewable natural gas from food scraps, RNG Energy intends to develop a 100 million gallons-per-year renewable diesel fuel project on the Girard Point side of the refinery that would cost $600 million, said James Potter, president of RNG Energy. It also wants to install about 10 megawatts of solar cells on various vacant spots within the refinery, he said. […]

Rinaldi’s partnership with a renewable-fuel manufacturer is unlikely to assuage local environmentalists and community groups, who had dubbed the self-proclaimed industrialist as “Fossil Phil” when he led a Greater Philadelphia Chamber of Commerce effort to transform Philadelphia into an “energy hub.”

Another biofuels company, S.G. Preston, has also shown interest but they have quite a sketchy history themselves. A third development group, Industrial Realty Group, completes the cadre of suitors and they would likely rebuild the refinery and continue to operate it largely as it exists now.

Two former employers are suing PES for not giving enough advanced warning about the massive loss of jobs but it appears that PES officials have cleaned out the bank account and moved on, leaving over 1,000 workers wondering what’s next.

So, just to recap:

STEP 1: Blow the place up
STEP 2: Fire the 1,000+ workers
STEP 3: Pay out $5 million in executive bonuses
STEP 4: File for bankruptcy

This all happened in the short space of just four weeks.

This is corporate America today.