The Commonwealth of Pennsylvania is voicing doubts about the turnaround plan of Philadelphia Energy Solutions, the troubled, private-equity-owned refinery operating near the heart of a major East Coast city, WSJ Pro Bankruptcy reported. In a Friday filing with the bankruptcy court reviewing Philadelphia Energy’s plan, state said that it has filed a tax claim against the company for $3.8 billion, an amount sufficient to upend the restructuring. The refinery operator, owned by Carlyle Group and Energy Transfer Partners, filed for chapter 11 protection Jan. 21, with a pre-packaged chapter 11 plan. It operates a complex within miles of Philadelphia’s downtown that converts crude oil into gasoline, jet fuel and other products. Long distressed, Philadelphia Energy resorted to chapter 11 protection to cement a debt-for-equity swap and to seek relief from regulatory obligations. The $3.8 billion figure for sales and use taxes came from an ongoing audit and isn’t final, according to Pennsylvania. “The Commonwealth believes, however, the final audit may produce a substantial liability which could impact the feasibility of the plan,” lawyers for Pennsylvania wrote.
