Hess creditors seek dismissal of Virgin Islands bankruptcy

ByDonald L. Leech

Sep 23, 2022

REUTERS/Christian Hartmann/File Photo

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  • Creditors say there is ‘nothing to rearrange’
  • Bankruptcy ‘sole purpose’ is to shield Hess from asbestos claims, creditors say

Sept 23 (Reuters) – Creditors of a bankrupt subsidiary of Hess Corp have asked a U.S. judge to throw out the company’s bankruptcy case, saying it served no purpose other than to protect Hess from lawsuits related to asbestos exposure at an oil refinery in the Virgin Islands.

Creditors allege Hess, a $37 billion energy company, abused US bankruptcy laws to dodge 900 claims stemming from asbestos contamination at a St. Croix refinery it had operated for decades, according to a petition filed Thursday in Houston bankruptcy court.

Asbestos at the refinery has caused lung disease and cancer, including mesothelioma, according to the official committee of creditors in the bankruptcy case.

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Hess subsidiary HONX filed for Chapter 11 protection in Houston on April 29, saying it intended to use the “respite” from a bankruptcy filing to reach resolution. fair and effective asbestos claims against Hess.

In the Thursday deposit, the creditors’ committee said HONX didn’t need a “breathing spell” because it was just a “corporate wrapper” that was resuscitated as a shield against lawsuits. The predecessor company to HONX operated the St. Croix refinery from 1965 to 1998, and the refinery has since been sold to new owners unaffiliated with Hess.

“There is nothing here to resuscitate,” the creditors wrote.

Hess said Friday that HONX’s bankruptcy offers the best way to achieve a “speedy and orderly” resolution of all asbestos claims related to the St. Croix refinery.

The creditors argue that the asbestos lawsuits should be allowed to proceed against Hess outside of bankruptcy court. Allowing litigation to continue would not hurt HONX, which has no operations or assets to disrupt, creditors say.

Hess is “terrified” to face juries in the Virgin Islands, where he received generous tax breaks while causing “devastating” damage to the air quality and water supply of St. Croix, wrote the creditors.

Those fears became particularly acute after the passing of a 2021 local law that sped up trials for claimants who are elderly or in poor health. Hess has never gone to trial in a Virgin Islands asbestos case, settling more than 1,000 cases to date, according to creditors.

The case is HONX Inc, US Bankruptcy Court for the Southern District of Texas, No. 22-90035.

For HONX: Christopher T. Greco, Matthew C. Fagen, Jaimie Fedell and Heidi Hockberger of Kirkland & Ellis LLP.

For the Creditors’ Committee: Marty Brimmage and Arik Preis of Akin Gump Strauss Hauer & Feld

Related links

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How a bankruptcy ‘innovation’ halted thousands of lawsuits from sick plaintiffs

investors balk at bankruptcy st. cross refinery needs $1 billion to be viable

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Reporting by Nimitt Dixit

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