Aleon Metals: Critical Minerals Recycler's 52-Day 363 Sale

Aleon Metals, LLC, the 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. The filing came after a sulfur dioxide scrubber failure shut down production at the company's Freeport, Texas 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 52-day bankruptcy resulted in a credit bid acquisition by the bondholder consortium that had provided $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.

Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	25-90305
Judge	Hon. Christopher M. Lopez
Petition Date	August 17, 2025
Debtor(s)	Aleon Metals, LLC (3 entities: Aleon Metals, Gladieux Metals Recycling, Aleon Renewable Metals)
Estimated Assets	$100-500 million
Estimated Liabilities	$100-500 million
Total Funded Debt	$403.2 million
DIP Facility	$187.5 million
Sale Price	$187.5 million (credit bid)
Buyer	DIP lender consortium (prepetition bondholders)
Sale Approval	October 8, 2025 (52 days post-filing)

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 evolved into what the company describes as the nation's leading 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. Vanadium is classified as a critical mineral by the U.S. Geological Survey under the 2025 Critical Minerals List, which designates 60 minerals vital to the U.S. economy and national security. Vanadium is essential for high-strength steel alloys used in jet engines, armor plating, and missile systems. Global production is highly concentrated: China and Russia together account for approximately 70% of world vanadium output.

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.

The facility houses multiple hearth furnaces, hydrometallurgical circuits, and an electric arc furnace. Products sold include molybdenum, vanadium, nickel, cobalt, and various alumina products for specialty chemical, catalyst, steel, foundry, and superalloy applications. Over 50 years of operations established GMR as a producer of metal commodities.

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.

Aleon Renewable Metals: Battery Recycling Expansion.

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 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.

The production decline—from 55,000 tons annually to approximately 2,131 tons during the 12 months preceding the filing—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.

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.

363 Sale Process and DIP Financing

The bankruptcy was structured from the outset as an expedited 363 sale process. On the petition date, the debtors filed a DIP financing motion and Sale Motion simultaneously, with the prepetition bondholder consortium serving as both DIP lenders and stalking horse bidder.

DIP Facility Structure.

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.

Sale Approval.

On October 8, 2025—just 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 credit bid structure meant the bondholders acquired the facilities in satisfaction of their DIP claims rather than paying cash.

Contested Matters: Retail vs. Institutional Bondholders

The sale process included objections. One objection came from retail bondholder investors who held smaller positions in the municipal bonds.

The retail bondholder objection. Retail investors argued that the DIP financing package "shuts out and unfairly subordinates" smaller investors. Their concern was that institutional bondholders who provided DIP financing and served as the stalking horse were positioned to become the new owners of the business, while retail bondholders faced subordination with limited ability to participate.

However, 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 September 8, 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.

U.S. Trustee objection to dismissal. Following the sale closing, the debtors filed a motion to dismiss certain cases on October 21, 2025. The U.S. Trustee objected on November 10, 2025, reflecting ongoing concerns about case administration and wind-down procedures.

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.

Critical Minerals Industry Context

U.S. supply chain constraints. Research from the Carnegie Endowment for International Peace published in October 2025 found that under even the most optimistic scenarios, by 2035 U.S. domestic production would meet projected demand only for zinc and molybdenum among critical minerals. For most critical minerals—including vanadium—the U.S. does not have sufficient domestic reserves, and fundamental supply limits cannot be resolved through domestic policy alone.

Vanadium's applications in defense systems include jet engines, armor, and missiles. Global production is concentrated in China and Russia, which together control approximately 70% of output.

The 2025 Critical Minerals List. The Department of the Interior published the final 2025 List of Critical Minerals on November 6, 2025, designating 60 minerals as vital to the U.S. economy and national security. Vanadium was included; USGS reviewed but did not propose to include molybdenum, Aleon's other primary product.

Battery recycling market growth. ARM's business plan targeted growing demand for battery recycling infrastructure as electric vehicle adoption increases. The co-location with GMR aligned alumina tailings from catalyst processing with planned feedstock for battery material production. The Forge Nano partnership added a cathode active materials component to the plan.

The bankruptcy sale transferred these assets, including the EAF and expansion plans, to the bondholder consortium.

Professional Retentions and Case Administration

The debtors assembled a team of restructuring professionals to manage the expedited 363 process.

Debtor Professionals.

Committee Professionals.

All professional fee applications were approved by late November 2025 after the sale closing.

Key Timeline

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.

What critical minerals does Aleon produce and why are they important?

Through Gladieux Metals Recycling (GMR), Aleon recovers vanadium, molybdenum, nickel, and cobalt from spent petroleum refinery catalysts. Through Aleon Renewable Metals (ARM), it was developing capability to recycle lithium, cobalt, nickel, manganese, and graphite from lithium-ion batteries. Vanadium is classified as a critical mineral by the U.S. Geological Survey, essential for jet engines, armor, and missile systems. China and Russia control approximately 70% of global vanadium production, and domestic recycling provides a U.S. source for those materials.

Who bought Aleon Metals in the bankruptcy?

A consortium of prepetition bondholders who had provided $187.5 million in DIP financing acquired the company through a credit bid approved on October 8, 2025—52 days after filing. The bondholders acquired the assets in satisfaction of their DIP claims rather than paying cash.

What was the conflict between retail and institutional bondholders?

Retail investors objected that the DIP financing package "shuts out and unfairly subordinates" smaller investors. 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.

How was the bankruptcy financed?

A consortium of prepetition bondholders provided $187.5 million in DIP financing, consisting of $62.5 million in new money loans and $125 million rolled up from existing prepetition bond claims. Prior to bankruptcy, the same bondholders had provided $17.8 million in bridge financing (May and July 2025) to stabilize operations after equity holders refused to provide additional capital.

What environmental issues arose in the case?

The Texas Commission on Environmental Quality (TCEQ) raised concerns about the Freeport facility, which had a history of environmental issues dating to the prior owner's bankruptcy. These concerns were resolved through a stipulation and agreed order approved October 20, 2025, enabling the sale to close with defined environmental compliance obligations.

What happened to the battery recycling business (ARM)?

Aleon Renewable Metals, which was developing lithium-ion battery recycling capability at the Freeport facility, was included in the 363 sale to the bondholder consortium. The electric arc furnace purchased in 2022 and expansion plans for 60,000 tons/year manufacturing capacity transferred to the bondholder consortium.

How fast was the bankruptcy process?

The case moved quickly: chapter 11 filed August 17, 2025; bidding procedures approved August 22; DIP final order September 16; sale approved October 8—52 days from filing to sale approval. This expedited timeline reflected the pre-negotiated sale structure with bondholders serving as both DIP lenders and stalking horse bidder.

What was the total debt structure?

Aleon had approximately $403 million in total funded debt, including: ~$164 million in ARM revenue bonds (2022 and 2023 series), ~$130 million in GMR revenue bonds (2019 and 2020 series), ~$42 million FTAI loan, ~$17 million Gladieux Metals loans, ~$18 million bridge financing, and ~$11 million Mason Metals repo obligation.

What are the implications for U.S. critical minerals policy?

The case involved a six-month production shutdown, $403 million in funded debt, and a credit-bid sale to bondholders, despite Congressional support for the facility's role in domestic vanadium production.

Who is the claims agent for Aleon Metals?

Stretto serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

Read more chapter 11 case research on the ElevenFlo blog.