Insolvency specialists handling collapsed companies which make up some of the Prax Group have estimated there could be more than £1.6bn in claims for creditors.
New documents relating to the Lindsey Oil Refinery parent company State Oil show HMRC is owed more than £70m and about 170 employees are owed more than £4.2m. Among other major creditors are BP, which is estimated to be owed £4.7m and Shell, with estimated claims of £10.39m.
Experts at Teneo, who have been sifting through the books of State Oil and other companies under the $10bn revenue Prax Group umbrella, explained that that "material irregularities" surrounding a £738m securitisation facility - or loan - were spotted by State Oil board members. The issue came to light on June 25 this year, when delays to Prax's Lindsey Oil Refinery on the Humber, and volatility in the oil and gas markets, had already put financial pressure on the group.
The refinery had a supply deal with commodities giant Glencore and was unable to pay for crude oil, leading to seizure of its oil products. State Oil directors had decided to stop using the £738m loan immediately, and only days later administrators were appointed to State Oil and other Prax companies.
Teneo said: "The securitisation facility was the main source of finance and working capital for the companies and the liquidation entities and supported cash pooling arrangements in the wider group. Without continued access to these funds it was not possible for the companies and the liquidation entities to meet critical payments as they fell due.
"Given the use of the securitisation facility had ceased, there was insufficient time to test any option to refinance the companies, and therefore it was not possible for the companies to raise additional finance and/or consider a debt restructuring. Consequently, a sale of the companies as going concerns was not achievable and it is not now considered reasonably achievable to rescue the businesses as going concerns through administrations of the companies."
Law firm Ashurst, which has been working with Teneo amid the fallout of the Prax collapse, last month filed a against Prax owner Winston Sanjeevkumar Soosaipillai on behalf of five of its former companies, including State Oil. They claim Mr Soosaipillai breached his duties as a director and are seeking damages.
Teneo said that in light of "allegations concerning potential irregularities" in the Prax companies' financial affairs, it had taken steps to "secure, control and impose new governance arrangements for the group entities which remain outside of insolvency". It stopped short of giving any further details on the allegations, or the legal case brought against Mr Soosaipillai.
Among the creditors listed in the documents is Deloitte, which led a turnaround effort in 2023 focusing on cost control at the refinery. Deloitte is estimated to be owed £700,000.
Teneo is now looking to sell some of Prax's assets including petrol stations and tankers. It remains uncertain the extent to which creditors may receive funds.
Prax's collapse has impacted hundreds of jobs, with Energy Minister Michael Shanks have called on Mr Soosaipillai to "do the right thing" and provide financial support to workers. He has also criticised them for leaving the business in a poor state and giving the Government “very little time to act".
into the Prax owners. This came after calls from Energy Secretary Ed Miliband, who is reported to have met with Mr Soosaipillai earlier this year, before Prax’s collapse.
