Court Allows Glencore $236 Million Lawsuit Against Prax’s Lindsey Refinery
High Court Ruling and Background of the Case
LONDON, Sept 21 (Reuters) - Commodities trader Glencore 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.
Background: Prax Lindsey Oil Refinery Collapse
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’s Claims and Legal Actions
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.
Official Receiver’s Opposition
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.
Focus of the Lawsuit and Allegations of Fraud
The lawsuit focuses on the Lindsey refinery, the assets of which US refiner Phillips 66 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.
Details of the Alleged Fraud
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.
Soosaipillai’s Response
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’s Role and the Court’s Assessment
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’s Ruling
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.
($1 = £0.7473)
(Reporting by Sam Tobin and Robert Harvey; Editing by Andrew Cawthorne)
