SEATTLE (Oil Monster): Commodities trader Glencore (GLEN.L) can bring a lawsuit against the now-insolvent Prax's Lindsey refinery over around $236 million worth of crude oil it supplied before the firm's collapse, London's High Court ruled on Monday.
The London-listed firm is seeking to recoup losses after last year's demise of Prax Lindsey Oil Refinery Limited, which operated the 113,000-barrel-per-day site in northern England that provided around 10% of the UK's petrochemical supply.
Glencore wants to recover any crude oil it provided which Prax still holds or the "traceable proceeds" of any refined crude. But, as the Prax company is in liquidation, Glencore needed permission to bring such a case from the High Court.
The Official Receiver, which is liquidating Prax Lindsey Oil Refinery Ltd, opposed the application but Judge William Trower gave Glencore permission to bring its case on Monday.
Glencore declined to comment. The Official Receiver did not immediately respond to a request for comment.
The lawsuit focuses on the Lindsey refinery, the assets of which US refiner Phillips 66 (PSX.N) bought earlier this year after a prolonged sale process, and the conduct of Prax's former chief executive Winston Soosaipillai, who Glencore alleges fraudulently misrepresented Prax's financial position.
Soosaipillai is alleged to have engaged in an extensive fraud linked to a £738 million ($987.59 million) securitisation facility, which is said to have involved Prax companies selling at least £334 million of fictitious invoices.
Lawyers representing Soosaipillai, who is separately facing a lawsuit from the administrators of the Prax group which he is defending, said they had no comment. Soosaipillai said in a statement to the Financial Times newspaper in June that he has "always acted in good faith" to protect the refinery and that any allegations of dishonesty were "untrue and offensive".
Glencore, which was the exclusive supplier of crude oil to the Lindsey refinery until Prax's collapse, argues it provided crude oil based on Soosaipillai's misrepresentations about the refinery's finances.
Judge Trower said in his ruling that Glencore would have some difficulty in tracing any crude oil which had been refined, but added that it had "a seriously arguable case" that it will be able to trace at least some of the assets.
Courtesy: www.reuters.com
