Aleon Metals Confirms Plan After $187.5M Bondholder Sale
Aleon Metals Confirms Liquidating Plan After $187.5M Bondholder Sale
ElevenFlo Research
March 6, 202624 min readUpdated September 8, 2026
Aleon Metals, LLC's chapter 11 case reached a confirmed liquidating plan about eight months after it began, not through the 52-day sale that defined its opening months but through a plan that emerged after the debtors abandoned their first exit strategy, a structured dismissal, when Judge Christopher Lopez raised concerns under the U.S. Supreme Court's Jevic line of cases. The debtor, operator of North America's largest petroleum catalyst recycling facility and a domestic producer of vanadium and molybdenum used in U.S. defense applications, filed for chapter 11 bankruptcy on August 17, 2025 in the U.S. Bankruptcy Court for the Southern District of Texas, case No. 25-90305, after a sulfur dioxide scrubber failure shut down production at its Freeport facility for six months, causing throughput to drop from 55,000 tons per year to just 2,131 tons—a 96% reduction in capacity utilization that left the company unable to service its $403 million in funded debt.
The case's opening phase produced a sale process in which Judge Lopez approved a $187.5 million credit-bid sale to the bondholder consortium 52 days after filing; the sale closed on October 21, 2025. The consortium had provided the debtors' $187.5 million in debtor-in-possession financing. Vanadium, classified by the U.S. Geological Survey as one of 60 minerals essential to national security, remains dominated by China and Russia, which together control nearly 70% of global production. Just three months before the filing, Texas Congressional leaders had publicly supported the Freeport facility for its role in the domestic defense supply chain.
$187.5 million credit bid, plus a cash Wind Down Amount
Buyer
DIP lender consortium (prepetition bondholders)
Sale Approval
October 8, 2025 (52 days post-filing)
Confirmation Date
April 10, 2026
Case Snapshot
From Spent Catalysts to Critical Minerals: Company Background
The Aleon Metals enterprise traces its origins to 1973, when Gladieux Metals Recycling was founded in Freeport, Texas, approximately 60 miles south of Houston in the U.S. Gulf Coast refining center. Over five decades, the facility grew into a recycler of spent petroleum catalysts—the vanadium- and molybdenum-rich materials generated as byproducts of hydroprocessing operations at oil refineries.
The company's current structure emerged from a 2017 acquisition out of bankruptcy. The prior owner, Gulf Chemical & Metallurgical Corporation, had filed for chapter 11 protection after enforcement actions by the Texas Commission on Environmental Quality, the Texas Attorney General, and the county district attorney's office for alleged persistent violations of environmental laws. As part of the asset purchase, Aleon entered into agreements with TCEQ to undertake various environmental remediation projects at the Freeport facility.
The core business model. Petroleum refineries generate spent hydroprocessing catalysts as a hazardous waste product that must be managed under federal environmental regulations. Refiners face a "cradle to grave" liability framework—even after sending catalyst to a landfill, they remain potentially responsible for any environmental contamination caused by that material. Aleon's recycling process offers refiners an alternative to landfilling or shipping material abroad for processing.
Under Aleon's hybrid pyrometallurgical and hydrometallurgical operations, refiners pay a fixed recycling fee to have their spent catalyst processed. Aleon then extracts high-purity vanadium and molybdenum and sells these metals into specialty chemical and metallurgical markets, including manufacturers of new refinery catalysts. A portion of the metal sale proceeds is credited back to the original refiners, with the net economic outcome depending on prevailing commodity prices.
Critical minerals significance. The metals recovered by Aleon include vanadium, a critical mineral essential for high-strength steel alloys used in jet engines, armor plating, and missile systems. The Department of the Interior included vanadium on the final 2025 List of Critical Minerals, published November 6, 2025 and designating 60 minerals vital to the U.S. economy and national security; USGS reviewed but declined to add molybdenum, Aleon's other primary product, to that list. Global production is highly concentrated: China and Russia together account for approximately 70% of world vanadium output. Research from the Carnegie Endowment for International Peace found that even under optimistic scenarios, U.S. domestic production would meet projected 2035 demand for only zinc and molybdenum among critical minerals, leaving vanadium and most other critical minerals dependent on imports or recycled supply.
Congressional attention followed. In May 2025—just three months before the bankruptcy filing—Texas Congressional leaders publicly supported Gladieux Metals Recycling's domestic vanadium production, emphasizing its role in reducing dependence on adversary nations for defense-critical materials. The 2025 omnibus spending bill signed into law earlier that year appropriated $2 billion to improve the U.S. stockpile of critical minerals.
The GMR Facility: North America's Largest Catalyst Recycler.
The Gladieux Metals Recycling facility in Freeport operates as the largest petroleum catalyst recycling plant in North America, with permitted capacity of 55,000 tons per year. The facility is unique in its ability to process both hydrodesulfurization (HDS) and residue desulfurization (RDS) catalysts—and is the only North American recycler capable of accepting RDS catalyst. This capability allows the facility to process both catalyst types; molybdenum is predominantly extracted from HDS catalyst, while vanadium comes primarily from RDS catalyst.
Since the 2017 acquisition, Aleon and its capital partners—including FTAI Infrastructure Inc. and Gladieux Metals, LLC (an entity associated with Jefferson Enterprise Management)—invested hundreds of millions of dollars into the facilities. These investments funded refurbishment of existing infrastructure, installation of pollution control equipment, permit amendments, and funding for future environmental remediation obligations.
Alongside the established catalyst recycling business, Aleon developed a lithium-ion battery recycling initiative through Aleon Renewable Metals (ARM). Co-located at the Freeport facility adjacent to GMR, ARM was designed to recycle end-of-life batteries and alumina tailings (a byproduct of catalyst processing) into battery-grade nickel and cobalt.
ARM's business plan targeted the growing electric vehicle, energy storage systems, and consumer electronics markets. The company was constructing a commercial-scale hydrometallurgical facility with approximately 60,000 tons per year of manufacturing capacity, expected to annually produce battery-grade materials equivalent to 35 GWh of renewable power. In May 2023, ARM partnered with Forge Nano for battery recycling and the manufacture of cathode active materials.
The ARM electric arc furnace—purchased from GMR in 2022 as part of the expansion—was central to battery recycling operations. However, the EAF required additional capital investment to achieve commercial viability, investment that did not materialize before the liquidity crisis and bankruptcy filing. The 363 sale ultimately transferred the EAF and ARM's expansion plans to the bondholder consortium along with the rest of the debtors' assets.
The SO2 Scrubber Failure and Production Collapse
The immediate cause of Aleon's bankruptcy was an equipment failure that led to operational and financial strain. The company's sulfur dioxide (SO2) scrubber—a pollution control device required under the federal Clean Air Act and state environmental regulations to remove sulfur dioxide from exhaust gases—malfunctioned in late 2024 and early 2025.
A properly functioning SO2 scrubber is critical to maintaining environmental compliance and plant throughput. Without it, the facility could not legally operate at normal capacity. The scrubber failure rendered production largely offline from February through July 2025—a six-month shutdown that cut average monthly throughput from approximately 4,583 tons to approximately 178 tons.
The production decline—from 55,000 tons annually to approximately 2,131 tons during the 12 months preceding the filing, a 96.1% reduction—left the company unable to generate sufficient revenue to service its $403 million debt load. Even during periods of higher production outside the complete shutdown, the facility did not achieve consistent uptime, and annualized production volumes were below the targets established in business plans.
Commodity price volatility also affected results. Beyond the immediate equipment failure, Aleon's business model carried exposure to vanadium and molybdenum price fluctuations. When commodity prices fell, the company's revenue from metal sales declined while fixed recycling fees provided only a partial hedge. This volatility contributed to unpredictable cash flows and periods of negative operating results even before the scrubber failure. The combination of a six-month production shutdown and commodity price volatility reduced liquidity.
Supplier disputes emerged. The production disruption strained relationships with key suppliers. The company leased storage containers (called "Bins") from vendors including Catalyst and Chemical Containers, LLC ("Hoover") and CCKX LLC ("Flo-Bin") for its catalyst recycling operations. In April and May 2025, both vendors filed complaints against GMR seeking recovery of alleged unpaid storage fees and return of leased bins—approximately 1,500 Hoover bins and 400 Flo-Bin bins, most containing spent catalyst products.
A separate dispute with Mason Metals, LLC added complexity. Under a Master Sale and Repurchase Agreement dating to April 2023, Mason Metals provided short-term financing to GMR secured by calcine—an intermediate metal product rich in nickel, cobalt, molybdenum, and vanadium. In May 2025, Mason Metals terminated the agreement and demanded return of the metal products stored in the bins. Environmental regulations complicated the company's ability to remove the metals from the bins, impeding efforts to resolve both the Mason Metals claims and the bin vendor disputes. The Mason Metals repo obligation stood at approximately $12.8 million as of the petition date.
Capital Structure and Municipal Bond Debt
Aleon's capital structure was dominated by tax-exempt municipal bonds issued through the Brazoria County Industrial Development Corporation, which financed facility expansion and working capital between 2019 and 2023. The total funded debt of approximately $403.2 million was distributed across multiple facilities and debt instruments.
Prepetition Debt Structure.
Obligation
Amount
Interest Rate
Maturity
Notes
ARM Debt
Series 2022 Revenue Bonds
$70.3M
10.00%
June 2042
Tax-exempt
Series 2023 Revenue Bonds
$93.7M
12.00%
June 2043
Tax-exempt
EAF Note (ARM to GMR)
$21.5M
6.00%
June 2025
Intercompany
May 2025 Bridge Financing
$15.0M
15.00%
May 2026
Pro rata with GMR
July 2025 Bridge Financing
$2.8M
15.00%
May 2026
Pro rata with GMR
ARM Subtotal
$203.3M
GMR Debt
Series 2019 Revenue Bonds
$23.0M
9.00%
March 2039
Senior secured
Series 2019A Revenue Bonds
$23.0M
9.00%
March 2039
Senior secured
Series 2019B Revenue Bonds
$48.2M
7.00%
March 2039
Senior secured
Series 2020 Subordinated Bonds
$35.4M
8.50%
March 2039
Subordinate to 2019
Gladieux Metals Note Payable
$7.5M
10.00%
December 2025
Equity holder
Gladieux Metals Subordinated Loan
$9.8M
8.00%
December 2026
Equity holder
Mason Metals Repo Loan
$10.9M
15.00%
Terminated
The municipal bond debt was structured as "solid waste disposal facilities revenue bonds" issued by the Brazoria County Industrial Development Corporation. The bonds were non-rated and tax-exempt, with proceeds lent to GMR or ARM under loan agreements secured by the facilities, equipment, and certain revenues. UMB Bank, National Association served as indenture trustee for all bond series.
Equity holder support ended. The company's indirect equity holders—FTAI Infrastructure Inc. and Gladieux Metals, LLC—had historically provided substantial capital through subordinated loans totaling approximately $60 million. However, as the First Day Declaration disclosed, when the liquidity crisis deepened in early 2025, these equity holders were no longer willing to provide additional capital. That decision led the company to seek alternative financing, ultimately leading to the bridge loans from bondholders and the chapter 11 filing.
Bridge financing from bondholders. Beginning in May 2025, a group of prepetition bondholders holding a supermajority of outstanding municipal bond indebtedness stepped in to provide emergency financing. The initial $15 million bridge loan in May 2025 stabilized operations and allowed the company to explore restructuring alternatives. When it became clear that the capital requirements and operational challenges made an out-of-court solution impractical, the same bondholders provided an additional $2.8 million in July 2025 to fund a marketing process and prepare for chapter 11.
Bondholder Sale Process and Financing
The bankruptcy was structured from the outset as an expedited asset sale. On the petition date, the debtors filed a debtor-in-possession financing motion and Sale Motion simultaneously, with the prepetition bondholder consortium serving as both lenders and stalking horse bidder.
The DIP facility's rollup component—allowing prepetition claims to be converted to postpetition DIP claims—gave the bondholder consortium a senior position in the capital structure. The new money component of $62.5 million provided liquidity for operations, professional fees, and capital investments to maintain the facility during the sale process.
As of the petition date, the debtors held only approximately $1 million in cash—insufficient to fund operations without immediate access to DIP financing. The First Day Declaration emphasized that failure to obtain the DIP facility would cause immediate and irreparable harm, likely forcing suspension of operations and material damage to relationships with employees, vendors, regulators, and customers.
Stalking Horse and Bid Procedures.
The DIP lender consortium was designated as the stalking horse bidder for substantially all of the debtors' assets. The stalking horse agreement provided for acquisition via a credit bid of DIP claims, assumption of certain liabilities, and payment of cash—subject to higher or better offers through a court-approved auction process.
The stalking horse received limited bid protections: an expense reimbursement but no break-up fee. The court approved a Bidding Procedures Order on August 22, 2025—just five days after filing—with a corrected order following on August 26, 2025.
Jefferies LLC served as investment banker, conducting the marketing process for potential third-party bidders. The marketing had actually commenced months before the filing; the bankruptcy provided a structured forum to conclude the process. By the petition date, Jefferies had canvassed 13 alternative financing sources and concluded that the bondholder DIP was the only executable option, since prospective new lenders were unwilling to prime the existing capital stack.
Sale Approval. On October 8, 2025—52 days after the petition date—Judge Christopher Lopez approved the sale of Aleon Metals' assets to the secured creditor consortium for $187.5 million. The purchase price consisted of the credit bid, discharging the bondholders' DIP claims, plus a cash component. The sale order required a cash Wind Down Amount of $1.1 million, made up of $440,000 for distribution to general unsecured creditors, $250,000 to fund a GUC trust, $67,500 for Committee professional fees, and $342,500 for Debtor professional fees. The sale closed on October 21, 2025.
Contested Matters: Retail vs. Institutional Bondholders
The DIP rollup drew objections that framed the case as a test of aggressive credit tactics in the municipal bond market. The bondholders offering the DIP loan and stalking horse bid were Invesco, Pimco, and Capital Research and Management, while other institutional holders including AllianceBernstein and Goldman Sachs Asset Management declined to participate. Subordinated holders described the rollup as a form of "creditor-on-creditor violence"—tactics more familiar in the high-yield corporate bond market than in municipal finance.
The retail bondholder objection. Retail investors argued that the DIP financing package was "fundamentally unfair" to holders who were not invited into the new-money tranche. The $125 million rollup converted the participating bondholders' prepetition claims into super-priority DIP claims. CRO Roy Gallagher stated that the DIP lenders viewed the rollup as integral and would not have provided the facility without it.
Stephen McMullin of Fulcrum Point Capital, which holds about $250,000 of the bonds, objected in court to the bondholder maneuvering, challenging larger asset managers over tactics he argued belonged in the corporate bond market. The objection came too late in the process to be considered by the court, which granted final approval to the DIP package.
Mason Metals objections. Mason Metals, whose repo agreement had been terminated prepetition, filed limited objections to both the DIP financing and bidding procedures, as well as to the motion to reject executory contracts. These objections reflected the unresolved dispute over the calcine inventory in storage bins.
UCC activity. An Official Committee of Unsecured Creditors was appointed on August 28, 2025, with Gray Reed as counsel and The Numbers Group as financial advisor. The UCC filed a preliminary objection to certain emergency motions but ultimately did not block the sale.
TCEQ Environmental Resolution.
Environmental compliance was an issue given the facility's history. The Texas Commission on Environmental Quality—the same regulator that had been involved in enforcement actions against the prior owner—raised concerns about the Freeport facility in connection with the sale.
On October 20, 2025, the court approved a stipulation and agreed order between the purchaser and TCEQ that resolved the environmental concerns and enabled the sale to close.
Jevic Concerns and the Liquidating Plan Pivot
With the sale closed, the debtors and the unsecured creditors' committee tried to end the cases quickly rather than proceed through a full chapter 11 plan. On October 21, 2025, they filed a joint structured-dismissal motion proposing to dismiss the affiliate cases first, create a GUC trust to hold the debtors' remaining assets and sale-derived cash for unsecured creditors, set administrative-claim and professional-fee procedures, reject remaining contracts, and dismiss the last case once specified conditions were met. The proposed waterfall reserved $440,000 for priority unsecured claims and non-deficiency unsecured claims, with remaining trust assets available for broader unsecured and deficiency-claim recoveries.
The U.S. Trustee's objection. The U.S. Trustee objected on November 10, 2025, arguing the structure was a disguised plan that sought plan-confirmation outcomes—creditor recoveries distributed through a trust—without the disclosure, voting, or statutory authority chapter 11 requires for such a mechanism. The objection also argued a post-dismissal trustee could not pursue estate causes of action because the estate would cease to exist once the cases were dismissed.
Judge Lopez's Jevic concerns. At a November 18, 2025 hearing, Judge Lopez repeatedly questioned whether he could authorize a GUC trustee to make pro rata distributions outside a confirmed plan, warned that approving the structure could set precedent for future end-runs around chapter 11 plan requirements, and linked the issue to the U.S. Supreme Court's Jevic line of cases governing structured dismissals and priority-skipping distributions.
Pivot to a formal plan. Facing that skepticism, the debtors abandoned the dismissal-and-trust structure. A December 8, 2025 exclusivity motion documented the pivot, seeking a 91-day extension of exclusivity through March 16, 2026 for plan filing and May 15, 2026 for solicitation so the debtors, the committee, and the bondholders could negotiate a conventional liquidating plan instead.
The liquidating plan and GUC trust. The debtors filed a Combined Plan and Disclosure Statement on February 10, 2026, structured as a liquidating plan rather than a going-concern reorganization. Class 1 priority claims and Class 2 other secured claims are unimpaired. Class 3 general unsecured claims are impaired and receive GUC trust interests plus pro rata distributions from the trust's distributable assets. Intercompany claims, intercompany interests, and existing equity are impaired, deemed to reject the plan, and existing equity receives no distribution. The plan names Patricia Missal as GUC trustee and establishes a three-member GUC trust oversight committee consisting of UMB Bank, Hoover Ferguson/Hoover Circular Solutions, and Dacon Corporation, with an administrative-claims bar date of March 27, 2026.
Disclosure statement approval. At a February 20, 2026 hearing, Judge Lopez conditionally approved the disclosure statement and solicitation procedures. The U.S. Trustee noted at the hearing that the plan had grown into a 71-page document for a case offering general unsecured creditors a recovery of roughly one-fifth of one percent. The court also flagged release and opt-out provisions for further review at confirmation.
Confirmation and effective date. Judge Lopez confirmed the Joint Plan of Liquidation on April 10, 2026, signing findings, conclusions, and a confirmation order that established the GUC trust, authorized transfer of trust assets, and approved issuance of GUC trust interests. The plan drew support from overwhelming majorities of Aleon's creditors, including the DIP lenders and the creditors' committee. The plan became effective on April 22, 2026, at which point the debtors' directors, managers, and officers were deemed resigned and the GUC trustee was authorized to act for the debtors and exercise the estates' powers.
Recoveries. The debtors' liquidation analysis put the hypothetical chapter 7 benchmark at about $1.063 million in total available assets, roughly $814,000 in gross proceeds after wind-down costs, and about $623,000 in net distributable proceeds after administrative and priority tax claims—translating to entity-level unsecured recoveries of approximately 0.22% at Gladieux Metals Recycling, 0.19% at Aleon Renewable Metals, and 0.17% at Aleon Metals. The confirmed chapter 11 plan instead directs a pro rata distribution of $373,006 to GUC trust beneficiaries other than deficiency-claim holders, plus a separate pro rata pool of $250,000 available to allowed general unsecured claims including deficiency claims.
Case closing. On June 24, 2026, the court entered an order closing the affiliate chapter 11 cases, while the main Aleon Metals case remains open to resolve claims adjudication and prosecute any GUC trust causes of action. Matters relating to the closed affiliates are to be administered in the main case without reopening those cases.
Professional retentions and fees. The debtors retained Morrison & Foerster as lead counsel for the expedited 363 process, with Norton Rose Fulbright as Texas restructuring counsel, Jefferies as investment banker, Ankura Consulting Group as restructuring advisor, and Roy Gallagher as chief restructuring officer; Stretto served as claims and noticing agent. The creditors' committee retained Gray Reed as counsel and The Numbers Group as financial advisor. The court entered retention orders for Jefferies, Morrison & Foerster, and the other debtor professionals on October 14, 2025, and fees continued accruing through the plan process: the December 31, 2025 monthly operating report showed more than $1.68 million in accrued fees for Morrison & Foerster alone.
Key Timeline
Date
Event
1973
Gladieux Metals Recycling founded in Freeport, Texas
2017
Aleon acquires GMR facility from Gulf Chemical bankruptcy
2019-2023
$313.5 million in tax-exempt bonds issued for facility expansion
June 2022
ARM closes $75 million battery recycling financing
May 2023
Forge Nano partnership for battery recycling and cathode materials
April 28, 2025
Roy Gallagher appointed CRO
May 2025
Texas Congressional leaders publicly support GMR vanadium production
May 2025
Mason Metals terminates repo agreement
May 7, 2025
Bondholders provide $15 million bridge financing
July 25, 2025
Additional $2.8 million bridge financing
February-July 2025
SO2 scrubber failure shuts down production
August 17, 2025
Chapter 11 petitions filed (3 Debtors)
August 19, 2025
DIP interim order ($187.5M)
August 22, 2025
Bidding procedures order entered
August 28, 2025
UCC appointed
September 16, 2025
DIP final order entered
October 8, 2025
Sale order approved ($187.5M credit bid plus cash Wind Down Amount)
October 14, 2025
Debtor professional retention orders entered
October 20, 2025
TCEQ environmental stipulation approved
October 21, 2025
Structured-dismissal and GUC trust motion filed
October 21, 2025
Sale to bondholder consortium closed
Frequently Asked Questions
What caused Aleon Metals to file for bankruptcy?
A sulfur dioxide (SO2) scrubber failure shut down production at the Freeport, Texas facility from February through July 2025. The six-month production outage caused throughput to fall from 55,000 tons per year to just 2,131 tons—a 96% reduction in capacity utilization. Unable to generate sufficient revenue to service $403 million in funded debt, the company filed chapter 11 on August 17, 2025.
Who bought Aleon Metals' assets in the bankruptcy sale?
A consortium of prepetition bondholders who had provided $187.5 million in DIP financing had its credit-bid sale approved on October 8, 2025—52 days after filing—and closed the purchase on October 21, 2025. The bondholders acquired the assets, including the Aleon Renewable Metals battery-recycling equipment and expansion plans, through a credit bid that discharged their DIP claims, supplemented by a cash Wind Down Amount funding unsecured-creditor distributions and professional fees.
Why did the debtors abandon a structured dismissal for a formal chapter 11 plan?
The debtors and the unsecured creditors' committee first sought to wind down the cases through a structured dismissal and GUC trust, filed October 21, 2025. The U.S. Trustee objected that the structure was a disguised plan lacking required disclosure and voting protections, and at a November 18, 2025 hearing Judge Lopez raised concerns under the U.S. Supreme Court's Jevic line of cases governing priority-skipping distributions outside a confirmed plan. Facing that skepticism, the debtors pivoted to a conventional liquidating plan in December 2025.
What did unsecured creditors recover under the confirmed plan?
The debtors' liquidation analysis estimated chapter 7 unsecured recoveries at roughly 0.17%-0.22% depending on the entity. The confirmed chapter 11 plan, which Judge Lopez approved on April 10, 2026, instead directs a pro rata distribution of $373,006 to GUC trust beneficiaries, plus a separate $250,000 pool available to allowed general unsecured claims including deficiency claims. The plan became effective April 22, 2026.
What was the conflict between retail and institutional bondholders?
Retail investors objected that the DIP financing package was "fundamentally unfair" to smaller investors not invited into the new-money tranche. Institutional bondholders who provided DIP financing and served as the stalking horse were positioned to become the new owners, while retail bondholders faced subordination and limited ability to participate. The objection was filed too late to be considered by the court.
Who is the claims agent for Aleon Metals?
Stretto serves as the claims and noticing agent. The confirmed liquidating plan set an administrative-claims bar date of March 27, 2026, with Stretto administering the claims register under that deadline.
Read more chapter 11 case research on the ElevenFlo blog.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
