Vertex Energy exits Chapter 11 with new CEO
Vertex Energy, Inc. has successfully completed its Chapter 11 financial restructuring, emerging as a privately-held entity. The company announced a revitalised capital structure, including up to USD100 million in exit financing and the elimination of USD320 million in prepetition debt, positioning it for long-term growth and operational excellence.
Under the restructuring plan approved by the U.S. Bankruptcy Court for the Southern District of Texas, Vertex secured USD40 million in initial borrowings upon its emergence. Ownership of the company transitions to certain lenders, including funds managed by BlackRock Financial Management, Highbridge Capital Management, Whitebox Advisors, and CrowdOut Capital.
The restructuring strengthens Vertex’s balance sheet, providing financial flexibility to optimise asset value and expand its focus on producing high-quality refined fuels and innovative energy solutions.
Leadership transition
As part of its emergence, Vertex introduced a new leadership team and board of directors. Mark Smith, with more than 40 years of experience in refining and related industries, has been appointed chief executive officer. Smith previously held leadership roles at Philadelphia Energy Solutions and Western Refining. He joins a newly constituted board chaired by Eugene Davis, alongside directors Zachary Viders, Jacob Mercer, and Daniel Hudson.
Smith remarked, “The company’s swift and successful emergence from chapter 11 is a significant achievement, and as a result, Vertex is in a strong financial position with the flexibility to optimise the value of its assets for all stakeholders.”
Founded in 2001, Vertex Energy started as a collector and processor of used motor oil based in Houston, Texas, U.S.A. Over the years, the company evolved into a significant player in the refining and marketing of renewable fuels, blending its legacy expertise with a forward-looking commitment to energy transition.
In April 2022, Vertex Energy acquired Shell’s Mobile, Alabama refinery for a base purchase price of USD75 million in cash, along with approximately USD25 million related to specified capital expenditures and other closing adjustments. Additionally, Vertex acquired approximately USD165 million in hydrocarbon inventory from Shell, financed through an intermediation agreement.
While the acquisition was a significant strategic move, Vertex Energy’s subsequent financial challenges were primarily due to broader market conditions. In May 2024, the company paused renewable diesel production at the Mobile refinery, citing macroeconomic issues and a supply glut in the renewable diesel market. These challenges, rather than the acquisition itself, contributed to Vertex Energy filing for Chapter 11 bankruptcy in September 2024.
Vertex plans to leverage its improved financial standing to enhance operational efficiency, uphold its safety commitments, and prioritise sustainability across its operations. The company expressed gratitude to its investors, customers, employees, and partners for their support during the restructuring process.
Advisory Team
Vertex was represented by Kirkland & Ellis LLP and Bracewell LLP as restructuring counsel, Perella Weinberg Partners as investment banker, and Alvarez & Marsal as chief restructuring officer. Sidley Austin LLP and Houlihan Lokey advised the term loan lenders.
Detailed information about the restructuring plan and related agreements can be found in the company’s Form 8-K on its website or the Securities and Exchange Commission’s website.
