Court rules that Glencore can sue refinery for $236 million in the UK

The London High Court ruled that commodities trader Glencore could sue the now insolvent Prax’s Lindsey Refinery for around $236 millions worth of crude oil they supplied before the collapse of the firm.

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 is seeking to recover crude oil that it supplied and which Prax has still held or "traceable profits" from any refined crude. Glencore had to get permission from the High Court as Prax is in liquidation.

The Official Receiver - which is liquidating Prax Lindsay Oil Refinery Limited - opposed the application, but Judge William Trower granted Glencore permission to present its case on Monday.

Glencore refused to comment. The Official Receiver didn't immediately respond to an inquiry for comment.

The lawsuit focuses primarily on the Lindsey Refinery, which US'refiner Phillips 66' purchased earlier this year following a lengthy sale process. It also focuses on Winston Soosaipillai's conduct, Glencore alleging that he fraudulently misrepresented Prax Financial Position.

Soosaipillai has been accused of committing a fraud involving a securitisation facility worth PS738m ($987.59m). Prax companies are said to have sold at least PS334m?of fake invoices.

Soosaipillai's lawyers, who are also facing a separate lawsuit by the administrators of the Prax Group, which he defends, have said that they "had no comment". Soosaipillai told the Financial Times in June that he had "always acted with good faith" in order to protect the refinery. He said any accusations of dishonesty are "untrue and offensive".

Glencore, the company that supplied crude oil exclusively to the Lindsey refinery up until Prax collapsed, claims it did so based on Soosaipillai’s false representations about the refinery’s finances.

Judge Trower stated in his ruling that Glencore would have difficulty tracing any crude oil that had been refined. However, he added that the company had a "seriously arguable" case that it could trace at least some assets.

(source: Reuters)