Vertex Energy: RSA-Driven Chapter 11 Confirms with Dual-Path Sale Recap Option
Vertex Energy Sept 2024 Houston ch. 11 under an RSA confirmed a plan with sale/recap options and post-confirmation admin.
Vertex Energy’s chapter 11 case is a lender-driven recapitalization built around a single operational reality: the company’s balance sheet and liquidity could not absorb continued underperformance and compliance overhang at the Mobile, Alabama refinery after a pivot into renewable diesel. The case was filed as a pre-arranged process supported by a restructuring support agreement with 100% of the company’s term loan lenders, positioning either an asset sale or a standalone recapitalization as the pathway to a sustainable capital structure.
The case highlights risks that can undermine a renewable fuels conversion: project execution (including a hydrogen facility), volatile biofuels margins, tightening liquidity, and an increasingly quantifiable Renewable Fuel Standard (RFS) compliance burden. The filing highlighted substantial RFS exposure and was framed as following a failed foray into renewable fuels at Mobile. The case then moved on a tight timeline consistent with a lender-controlled DIP and a fast plan track, culminating in confirmation on 2024-12-20 and an effective date on 2025-01-21.
| Debtors | Vertex Energy, Inc., et al. |
| Court | U.S. Bankruptcy Court, Southern District of Texas (Houston Division) |
| Lead case number | 24-90507 |
| Judge | Christopher M. Lopez |
| Petition date | 2024-09-24 |
| Employees | ~480 across multiple states (bankruptcy filings) |
| DIP facility | Up to $280M total commitments (bankruptcy filings), including up to $80M new money and up to $200M roll-up; the new-money component was often described as an “$80M DIP” and as an “$80M DIP” |
| Plan posture | chapter 11 plan of reorganization (second amended; confirmed) (bankruptcy filings), with emergence described publicly |
| Confirmation date | 2024-12-20 (bankruptcy filings) |
| Effective date | 2025-01-21 (bankruptcy filings) |
| Exit financing (public) | Up to $100M commitment, including $40M of initial borrowings upon emergence |
| Outcome (high level) | Deleveraging of ~$320M of prepetition debt, cancellation of existing equity, and transition to a privately held company owned by certain lender funds (bankruptcy filings) |
| Claims agent | Verita Global (bankruptcy filings) |
Company Background and Mobile Refinery
Business model: from used motor oil to a Gulf Coast refinery footprint. Vertex’s corporate history is often told as a “collection-to-refining” story: the company grew from used motor oil (UMO) collection and re-refining into a broader refining and marketing business over two decades in its corporate history. The chapter 11 case, however, is fundamentally about the addition of Mobile: the acquisition of a large conventional refinery footprint created both the upside thesis (scale, refining optionality, and renewable fuels conversion potential) and the downside exposure (high fixed costs, large working-capital swings, regulatory compliance burdens, and project-execution risk).
The Mobile purchase itself was structured as a transformative deal. Vertex acquired the Mobile refinery in April 2022 with a purchase price described as $75 million in cash plus approximately $25 million for capital expenditures and closing adjustments. The acquisition release also described the scale and infrastructure attached to Mobile, including a refinery described as 91,000 barrels-per-day, millions of barrels of product storage, significant acreage, and a terminal asset, plus a supply and offtake agreement described as secured with Macquarie. The acquisition marked a shift from a UMO-focused profile into a conventional refining footprint with different liquidity and compliance demands.
| Business component | How it generates value | Why it became important in chapter 11 |
|---|---|---|
| Conventional refining (Mobile, Alabama) | Refining margins and throughput economics tied to crude slate, crack spreads, and operational reliability | Mobile became the primary “enterprise value engine” and also a main source of losses and compliance overhang in the renewable diesel pivot in the filing narrative |
| Renewable fuels conversion at Mobile | Margin capture via renewable diesel production, contingent on stable operations and RFS compliance | External coverage described difficulty capitalizing on the renewable fuels market |
| Used motor oil collection and re-refining (legacy) | Fee-based collection and re-refining economics with different working capital characteristics | Bankruptcy filings describe Vertex as maintaining UMO-related operations alongside Mobile |
Renewable Diesel Strategy and RFS Exposure
The renewable diesel thesis: what “one asset, two fuels” requires. Renewable diesel conversions at legacy refineries are often pitched as “optional capacity” that can shift between conventional and renewable products. The reality is that the conversion only works financially if (i) the unit runs at reliable throughput, (ii) the regulatory compliance and credit ecosystem supports margins, and (iii) the company can fund both the conversion capex and the inevitable commissioning friction. The filing narrative described output at Mobile as below projections and described hydrogen facility delays and cost overruns as part of the distress story.
Vertex’s own public statements in May 2024 anchored the strategic pivot away from renewable diesel. The company described a decision to “strategically pause” renewable diesel and return the hydrocracker to conventional fuel production, citing macro headwinds for renewables. The same pivot was described as tied to modeled economics, including a projected additional $40M of fuel gross margin on conventional fuels in Q1 2024, and the company described a Q1 2024 gross loss from renewable diesel operations versus a conventional refining gross profit in the same period.
| Indicator of pivot economics | Metric described publicly | Why it matters for the restructuring narrative |
|---|---|---|
| Renewable diesel vs. conventional profitability | Q1 2024 renewable diesel gross loss vs. Q1 2024 conventional refining gross profit | Supports a “return-to-basics” thesis at emergence: stabilize cash generation by prioritizing conventional runs |
| Renewable diesel throughput | 4,003 barrels per day of renewable diesel in Q1 2024 | Provides a scale reference for how the renewable unit was performing versus expectations and capital invested |
| Margin opportunity from conventional reversion | Modeling described as suggesting additional $40M of fuel gross margin on conventional fuels in Q1 2024 | Shows why lenders might prefer a recapitalization that keeps the asset operating rather than a forced liquidation |
Operational reset during chapter 11: reconversion to conventional service. The bankruptcy did not freeze operating decisions; it accelerated them. Vertex restarted the hydrocracker in conventional service on October 9, 2024, processing traditional vacuum gas oil to produce gasoline and diesel. That operational step is a key indicator of the plan’s underlying thesis: the reorganized company would be a conventional refiner with reduced leverage, not a high-risk renewable diesel growth story.
The key discipline in describing this shift is timing: the company described the pause decision in May 2024, implemented the reconversion during the chapter 11 process in October 2024, and described a conventional operating posture at emergence in January 2025.
RFS obligations: why compliance became a restructuring variable. The RFS is not a “footnote liability” for a refiner; it can become a gating issue for liquidity, plan feasibility, and stakeholder willingness to fund or own the reorganized business. Vertex was described as owing approximately $72 million in fees tied to the RFS program. Bankruptcy filings similarly describe the debtor estimating RFS obligations that continued to accrue, framing the obligation as a growing liability driver.
During the case, Vertex reached a settlement with the EPA and Department of Justice addressing RFS obligations. The settlement required retirement of 18,794,250 RINs by March 31, 2025 and described financial penalties for non-compliance. In a restructuring context, this matters for a practical reason: it turns an “estimated liability” into a scheduled compliance deliverable with an external enforcement framework.
| RFS settlement item | Term described publicly | Why it mattered to emergence |
|---|---|---|
| Settlement parties and date | Settlement described as reached on December 17, 2024 | The timing indicates the plan track and compliance track were intertwined rather than sequential |
| Core deliverable | Retirement of 18,794,250 RINs by March 31, 2025 | A hard deliverable that affects liquidity planning and post-emergence financing needs |
| Non-compliance consequences | Described penalty mechanics | Strengthens the case for a lender-owned structure with tighter governance and a defined funding plan |
| Mobile refinery scale reference | Capacity described as up to 88,000 barrels per day of crude oil | Frames the industrial footprint at stake and why a continuation plan might be preferable to a shutdown |
Market headwinds and financing constraints: why a conventional refiner still needed a recap. Bankruptcy filings describe sector headwinds in the renewable fuels market (including margin compression) and deterioration in refining economics. The company’s credit profile also deteriorated before the filing, including a downgrade to CCC reflecting liquidity and debt concerns. In a lender-led case, these headwinds show up as a governance story: lenders are less willing to extend runway without stronger controls, and they are more likely to use roll-ups and milestones to lock in a short path to plan confirmation.
Restructuring Path: RSA and DIP Financing
RSA framework: “sale or recap” is a governance statement. Vertex’s public communications described the restructuring support agreement as supported by 100% of term loan lenders and framed the filing as a pre-arranged process intended to achieve a sustainable capital structure. The same release described the RSA as contemplating either an asset sale or a standalone recapitalization transaction. This “dual-path” framing matters because it sets the negotiation leverage: lenders can keep an exit option open (a sale) while also pursuing a baseline plan path (a recapitalization that converts debt to equity).
The filing was framed as seeking a sale after a failed renewable diesel push and described the Mobile refinery’s capacity and role in the restructuring thesis. Public coverage also described scale and losses, including revenue exceeding $3 billion in 2023 while operating at a loss and total debt of $422.2 million at filing. These figures help explain why “sale vs. recap” is not theoretical: a levered refiner with volatile margins can quickly become a distressed asset if lenders do not believe the operating plan can produce a stable cash buffer.
| “Deal posture” indicator | What it suggests | Source |
|---|---|---|
| RSA supported by 100% of term loan lenders | High lender coordination and ability to run a fast plan process | 100% |
| Sale alternative described | Lenders preserved optionality to monetize assets if recap thesis did not hold | sale |
| “$80M DIP financing” headline | Public narrative emphasized new-money liquidity component rather than roll-up magnitude | “$80M DIP” |
DIP financing: reconciling the “$80M DIP” headline with the full facility structure. Public coverage frequently described Vertex receiving an “$80M DIP”, which is accurate as shorthand for the new-money component, but incomplete as a description of the financing package. Bankruptcy filings describe a DIP facility with total commitments up to $280 million, comprised of up to $80 million in new money and up to $200 million in roll-up of prepetition term loan obligations. The roll-up ratio described in filings—up to 2.5:1 roll-up relative to new money—shows the case’s core bargaining feature: lenders provided liquidity but also repositioned a large part of the prepetition capital stack into the postpetition DIP structure.
This kind of DIP design is economically meaningful. In a roll-up heavy DIP, the “cost” is not just pricing; it is priority and governance. The DIP increases the proportion of the capital structure held under DIP protections, and it can compress the negotiation window by tying maturity and default concepts to milestones. Bankruptcy filings describe a short “earliest-of” maturity concept tied to court approval milestones and plan timing, which is consistent with a lender-led prearranged case.
| DIP component (as described in bankruptcy filings) | Amount | What it does economically |
|---|---|---|
| Total DIP facility | Up to $280M | Sets the overall cap on postpetition liquidity and roll-up mechanics |
| New-money DIP | Up to $80M (with ~$40M available on an interim basis) | Provides operating liquidity and stabilization runway as the plan track progresses (bankruptcy filings). The new-money component was described publicly as an “$80M DIP” |
| Roll-up of prepetition term loan | Up to $200M, in tranches (interim, restricted, final) | Moves prepetition secured debt into DIP priority and protections, concentrating negotiating leverage |
| Roll-up ratio | Up to 2.5:1 relative to new money | Signals a lender-supervised financing with strong creditor protections |
| Selected fees and pricing mechanics | 3% commitment fee (PIK) and 3% closing fee (PIK) on new-money commitments; base rate plus a PIK margin described in filings | PIK fee structure reduces immediate cash drain but increases the postpetition claim stack |
Milestones: why the DIP timetable mattered as much as the dollars. Bankruptcy filings describe milestones tied to interim approval, final approval within roughly 30 days, and confirmation and effective date targets within roughly 95 and 115 days after the petition date. In practical terms, this is the opposite of an “open-ended refinery restructuring.” It is a timeline designed to (i) force a fast resolution, (ii) limit value erosion from ongoing losses or margin volatility, and (iii) ensure the company’s compliance deliverables (including RFS obligations) are addressed in an implementable capital structure.
| Milestone concept (as described in bankruptcy filings) | Target timing (relative) | Why it matters |
|---|---|---|
| Interim order | Within days of petition date | Stabilizes liquidity and cash collateral governance quickly |
| Final order | Within ~30 days of petition date | Converts interim stabilization into a court-approved final financing framework |
| Confirmation order | ~95 days after petition date | Enforces a fast plan track rather than a prolonged sale/auction timeline |
| Effective date | ~115 days after petition date | Pushes the case toward an “emerge quickly” posture, limiting operational drift |
Plan Confirmation and Creditor Treatment
Confirmed plan mechanics: deleveraging, lender ownership, and the GUC Trust. The emergence narrative emphasized deleveraging and a lender ownership outcome. Vertex’s emergence release described deleveraging approximately ~$320 million of prepetition debt and stated that the reorganized company would operate as a privately held entity owned by certain lender funds, while also describing exit financing commitments up to $100 million including $40 million of initial borrowings upon emergence. Bankruptcy filings describe the plan path similarly: term loan claims receiving equity-oriented treatment, general unsecured creditors receiving beneficial interests in a trust vehicle, and existing equity interests being canceled.
The plan outcome and the distribution mechanics are easiest to understand separately. The outcome was the conversion of secured lender claims into ownership and a reduced-leverage post-emergence capital structure. The mechanics determined how various unsecured constituencies received value through a trust structure and waterfall.
| Constituency | Treatment structure (high level, as described in bankruptcy filings) | Why it matters |
|---|---|---|
| Term loan claims | Impaired; pro rata distribution of new common stock, subject to dilution and plan mechanics | Establishes lender control and aligns ownership with the capital providers that drove the DIP |
| General unsecured claims (non-Vertex debtors) | Impaired; beneficial interests in a GUC Trust | Creates a centralized mechanism to liquidate and distribute designated assets, rather than paying cash immediately |
| General unsecured claims (Vertex) and certain other claim classes | Impaired; beneficial interests in the GUC Trust after senior unsecured layers are satisfied | Waterfall sequencing can materially change recoveries and litigation incentives |
| Existing equity | Impaired; deemed rejected/canceled | Reinforces that the restructuring was a debt-to-equity deleveraging transaction |
GUC Trust economics: what “$2.225M plus causes of action” implies. Bankruptcy filings describe the creation of a GUC Trust funded with $2,225,000 in cash plus designated causes of action and other assets described as settlement assets, with distributions net of trust fees and expenses. In creditor economics, a trust funded with modest cash and litigation assets tends to mean that unsecured recoveries depend heavily on (i) settlement outcomes and (ii) the realized value of avoidance actions and related claims. That structure can also change negotiation dynamics: creditors that might otherwise fight over plan value can instead focus on who controls litigation strategy and what information is preserved for trust beneficiaries.
| GUC Trust feature (as described in bankruptcy filings) | What it means | Practical implication |
|---|---|---|
| Cash funding | $2,225,000 | Provides initial liquidity for trust operations and some early distributions |
| Asset package | Designated causes of action and settlement assets | Shifts value realization to litigation/settlement execution rather than cash distributions at emergence |
| Waterfall sequencing | Non-Vertex GUCs before certain other GUC classes, then convert claims, then deficiency claims | Determines who bears the “tail risk” of low recoveries and extended litigation timelines |
Releases and exculpation: governance risk allocation. Bankruptcy filings describe a release/exculpation/injunction framework approved at confirmation. In lender-led cases, these provisions often serve as risk allocation: stakeholders who fund and implement the plan want protection from later litigation over plan negotiations and restructuring execution. Releases can be a lever in contested matters, especially where unsecured creditors seek additional value or investigation rights.
Post-emergence governance: leadership change as part of the recapitalization. Leadership transition was part of the emergence narrative. Vertex’s emergence release described the CEO and CFO concluding their tenures and described the appointment of a new CEO, Mark Smith.
The leadership reset was presented as part of the post-emergence operating thesis. In Vertex’s case, that thesis was reinforced by the operational decision to return the hydrocracker to conventional service during the case and the emphasis on conventional production economics in October 2024 and at emergence.
| Post-emergence element | What was described publicly | Why it signals case outcome |
|---|---|---|
| Ownership | Privately held company owned by certain lender funds | Confirms debt-to-equity recapitalization rather than a sale to a strategic buyer privately held |
| Exit financing | Up to $100M commitment, including $40M initial borrowings | Shows that emergence required fresh liquidity, not only deleveraging $100M |
| Leadership | Appointment of a new CEO at emergence | Common in lender takeovers to align operations and governance with the new capital structure Mark Smith |
Why This Case Matters
Key takeaways for practitioners. Vertex’s case matters because it concentrates several modern restructuring themes into a single, teachable pattern:
- A lender group that financed an acquisition and conversion project can become the logical “end owner” when the project underperforms and alternative financing closes.
- Renewable fuels strategies can create both operating risk (commissioning and unit performance) and regulatory risk (RFS obligations), and both can interact with liquidity in ways that drive a fast chapter 11.
- A roll-up heavy DIP is a governance instrument: it moves the capital structure into DIP priority and compresses the timeline through milestones.
- Unsecured recoveries can be pushed into a trust structure funded primarily by causes of action, shifting value realization to post-confirmation litigation and settlement execution.
Each of these themes is grounded in the record: a lender-supported RSA backed by 100% of term loan lenders; distress tied to renewable diesel underperformance; a settlement requiring retirement of 18,794,250 RINs by March 31, 2025; and emergence on January 21, 2025 with a lender ownership outcome, exit financing, and a leadership change including appointment of Mark Smith.
Key Timeline
Timeline. A dense timeline table is the most efficient way to connect the Mobile acquisition, the renewable diesel pivot, the RFS settlement, and the restructuring outcome.
| Date | Milestone | Why it mattered |
|---|---|---|
| 2022-04-01 | Acquisition of the Mobile refinery from Shell completed | Created the asset base and the platform for a renewable diesel conversion strategy |
| 2022-02 (commitment) | Commitment letter described for a $125M first-lien term loan to fund Mobile and conversion | Shows that the lender group financing the build was structurally positioned to control outcomes later |
| 2023-05 (start referenced) | Renewable diesel operations at the hydrocracker described as beginning about one year before May 2024 | Frames how quickly the renewables thesis turned into a pause decision |
| 2024-05-09 | Decision announced to pause renewable diesel and return to conventional service | Public pivot point away from renewables and toward conventional margin capture |
| 2024-09-24 | chapter 11 petitions filed under a lender-supported RSA | Formal start of the prearranged restructuring process |
| 2024-10-09 | Hydrocracker restart in conventional service during bankruptcy | Operational confirmation that the plan thesis was “return to conventional” |
| 2024-12-17 | EPA/DOJ settlement described as reached on RFS obligations | Converted compliance overhang into a defined RIN retirement requirement |
| 2024-12-20 | Confirmation order entered | Court approval of the second amended plan framework |
| 2025-01-21 | Plan effective date occurred | Emergence; lender ownership implemented; equity canceled; exit financing drawn |
Frequently Asked Questions
When did Vertex Energy file for chapter 11 bankruptcy?
Vertex Energy filed chapter 11 petitions on September 24, 2024 under a restructuring support agreement supported by 100% of its term loan lenders.
Where was the Vertex Energy bankruptcy case filed, and who is the judge?
The chapter 11 cases were filed in the U.S. Bankruptcy Court for the Southern District of Texas, and court filings identify Christopher M. Lopez as the judge.
What was Vertex Energy’s business and why did the Mobile refinery matter?
Vertex’s business evolved from used motor oil collection and re-refining into ownership of the Mobile refinery, which was acquired in 2022 and described as a Gulf Coast refining complex with storage and terminal assets. The Mobile asset became central because the renewable diesel conversion strategy and the subsequent pivot back to conventional operations drove the restructuring timeline.
What went wrong with Vertex’s renewable diesel strategy?
The filing was framed as following a failed foray into renewable fuels at Mobile, with production challenges, hydrogen facility delays, and cost overruns described in the public narrative. Vertex announced in May 2024 that it would pause renewable diesel production and return the hydrocracker to conventional service.
What were Vertex’s Renewable Fuel Standard (RFS) obligations, and what did the EPA settlement require?
Vertex was described as owing approximately $72 million in fees tied to the RFS program. The settlement required retirement of 18,794,250 RINs by March 31, 2025, with penalties described for non-compliance.
How much DIP financing did Vertex obtain, and why do some sources say “$80 million”?
Some sources described the DIP as $80 million, reflecting the new-money component. Bankruptcy filings describe a larger total DIP package up to $280 million because it also included up to $200 million of roll-up of prepetition term loan obligations.
What did the confirmed plan do to Vertex’s debt and equity?
Vertex’s emergence release described deleveraging approximately ~$320 million of prepetition debt and stated that the reorganized company would operate as a privately held company owned by certain lenders. Bankruptcy filings describe term loan creditors receiving equity-based treatment and existing equity interests being canceled.
What is the GUC Trust and what assets funded it?
Bankruptcy filings describe a GUC Trust funded with $2,225,000 in cash plus designated causes of action and other settlement assets, with distributions net of trust fees and expenses and subject to a waterfall.
Who is the claims agent for Vertex Energy?
Verita Global serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
For more chapter 11 case research, visit the ElevenFlo blog.
