Vertex Energy: Lenders Take Equity in $320M Recapitalization After Auction Fails

Vertex Energy emerged from chapter 11 as a privately held company owned by its term lenders after a marketed sale process drew no qualified bid and the company shed roughly $320 million of prepetition debt through a lender-led recapitalization. The Houston-based refiner filed chapter 11 on September 24, 2024 in the U.S. Bankruptcy Court for the Southern District of Texas (Houston Division), lead case number 24-90507, under a restructuring support agreement backed by 100% of its term loan lenders.

The case ran on a dual track. The RSA contemplated either an asset sale or a standalone recapitalization, financed by an approximately $280 million debtor-in-possession facility that let Vertex run a sale process while preserving the balance-sheet alternative, as described in the McGovern DIP and bidding declaration. The filing followed Vertex's pivot away from renewable diesel at its Mobile, Alabama refinery and an accrued Renewable Fuel Standard compliance burden that management estimated at roughly $72.3 million in the Bullock First Day Declaration. When the auction produced no qualified bid, the recapitalization became the only executable path, and the court confirmed the second amended plan on December 20, 2024.

Debtors	Vertex Energy, Inc. (jointly administered affiliates)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	24-90507
Petition Date	September 24, 2024
Confirmation Date	December 20, 2024
Effective Date	January 21, 2025
Judge	Hon. Christopher M. Lopez
DIP Facility	Up to $280M superpriority delayed-draw term loan ($80M new money plus $200M roll-up); BlackRock, Whitebox, and Highbridge term lender groups
Outcome	Roughly $320M deleveraged; existing equity canceled; reorganized as a privately held company owned by lender funds
Claims Agent	Verita Global

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From Mobile Refinery Acquisition to the Renewable Diesel Pivot

Vertex grew from used motor oil collection and re-refining into a Gulf Coast refiner over roughly two decades. The chapter 11 case traced to the April 2022 acquisition of the Mobile refinery from Shell for $75 million in cash plus roughly $25 million for capital expenditures and closing adjustments. The acquisition release described a refinery rated at 91,000 barrels per day with millions of barrels of product storage, a terminal asset, and a supply-and-offtake arrangement with Macquarie. Vertex financed the purchase and the planned renewable diesel conversion with a senior secured term loan, having received a commitment letter for a $125 million first-lien facility in early 2022 from the lender group that later took the reorganized equity.

Vertex converted part of Mobile's hydrocracking capacity to renewable diesel, but the unit underperformed. The company reported a Q1 2024 gross loss on renewable diesel against a conventional refining gross profit in the same period, with renewable diesel throughput of 4,003 barrels per day. In May 2024, Vertex said it would pause renewable diesel and return the hydrocracker to conventional fuel production, citing renewables headwinds and modeling an additional $40 million of conventional fuel gross margin in Q1 2024. The Bullock First Day Declaration attributes the distress to liquidity pressure, hydrogen-facility delays and cost overruns, dependence on continued trade-credit intermediation, and the accruing RFS obligation.

The company executed the reconversion during the case. Vertex restarted the hydrocracker in conventional service on October 9, 2024, processing vacuum gas oil into gasoline and diesel, and described a conventional operating posture at emergence in January 2025. The reorganized company would operate as a conventional refiner rather than a renewable diesel producer.

RFS Overhang and the EPA Consent Decree

The RFS obligation became a gating issue for plan feasibility. The Bullock First Day Declaration estimated the accrued Renewable Fuel Standard burden at roughly $72.3 million, a figure external coverage reported as about $72 million in program fees. Vertex's liquidity had already thinned to the point that it needed a $25 million bridge loan in August 2024 to reach an orderly filing, and its credit profile had been downgraded to CCC earlier in 2024 on liquidity and debt concerns.

Vertex resolved the obligation through an EPA/DOJ consent decree that the court approved on January 13, 2025. The order approving the environmental settlement resolved civil claims tied to 2023–2024 Clean Air Act and RFS compliance issues and required the reorganized debtors to retire 18,794,250 RINs by March 31, 2025, broken out across D3, D4, D5, and D6 categories, with reporting obligations and stipulated penalties for noncompliance. The order records that the debtors viewed settlement with the EPA as necessary to avoid a serious risk of liquidation or chapter 7 conversion if the EPA's confirmation objection were sustained, and it required the plan documents to conform to the settlement where they conflicted.

Prepetition Capital Structure and Term Loan Stack

Vertex entered chapter 11 with roughly $422 million of funded debt concentrated in its term loan and an intermediation facility that financed crude and feedstock purchases. The Bullock First Day Declaration describes the principal components as of the petition date:

Instrument	Approx. amount
Term loan facility	$271.9 million
Macquarie intermediation facility claims	$111.2 million
Finance leases	$23.8 million
2027 convertible notes	$15.2 million
Subordinated unsecured notes	$0.4 million

Vertex relied on the Macquarie intermediation facility to finance crude and feedstock purchases at Mobile, which tied liquidity directly to refining margins and to continued trade-credit support, as the First Day Declaration explains. The RSA contemplated either a recapitalization or an asset sale, including a potential credit-bid sale by the term lenders if no higher third-party bid emerged.

DIP Financing and the $200 Million Roll-Up

The DIP was an approximately $280 million senior secured superpriority delayed-draw term loan, split into up to $80 million of new money and a $200 million roll-up of prepetition term loan debt, per the McGovern DIP and bidding declaration. Interim availability was roughly $39.4 million of new money plus a $37.95 million interim roll-up, with the remaining roll-up tranches funded on final-order mechanics described in the Final DIP Order. Public coverage frequently described the facility as an $80 million DIP, which captured the new-money component but omitted the roll-up that moved a large part of the prepetition stack into postpetition priority.

McGovern described pricing at Base Rate plus 9.50% on new-money loans and plus 9.40% or 9.60% on the roll-up tranches depending on tranche type, alongside a 3.00% commitment fee, a 3.00% closing fee, a $35,000 DIP agent fee, and up to two one-month maturity extensions for a 2.00% drawn-amount fee, per the McGovern declaration. The Final DIP Order granted the DIP parties section 364(c)(1) superpriority claims and gave the prepetition term loan secured parties adequate protection through replacement liens, section 507(b) superpriority protection for diminution in value, payment of reasonable documented fees and expenses, and PIK interest at the non-default contract rate.

The DIP timetable set the pace of the case. Judge Lopez granted final approval to access the full facility on October 29, 2024. The Final DIP Order tied the facility to milestones for interim approval, final approval within roughly 30 days of the petition date, and confirmation and effective-date targets within roughly 95 and 115 days, compressing the case toward a fast plan resolution rather than a prolonged sale.

Marketed Sale, Failed Auction, and the Recap-Only Outcome

Perella Weinberg Partners ran a postpetition marketing process while the plan preserved the standalone recapitalization track. The McGovern declaration states the debtors contacted 18 financial institutions and 53 potentially interested parties before and around the filing, and McGovern's later confirmation declaration describes outreach to about 80 potential purchasers over a 77-day process supported by a confidential information memorandum, a virtual data room, management calls, site visits, and two deadline extensions. The bidding procedures motion and bidding procedures order set an October 23, 2024 indication-of-interest deadline, a November 22, 2024 qualified-bid deadline, and a November 25, 2024 auction, with separate tracks for a credit-bid sale and a third-party sale.

The process produced no qualified bid. The confirmation declaration states that no qualified bids for any portion of the assets arrived by the deadline, that the indications of interest did not generate actionable value sufficient to support a sale, and that the debtors canceled the auction on December 10, 2024, an event recorded in the notice of cancellation. Management pivoted to a lender-led recapitalization as the only actionable path, citing the absence of viable sale alternatives, a valuation that did not exceed the DIP and term loan debt, and the benefit of preserving the business as a going concern, per the confirmation declaration.

Confirmed Plan, Class Treatment, and the GUC Trust

Judge Lopez approved the disclosure statement for the first amended plan on November 18, 2024 and confirmed the second amended plan on December 20, 2024. The Confirmation Order describes a structure that converted term loan claims into ownership of the reorganized company, routed unsecured constituencies into a GUC trust, and canceled existing equity.

Class	Treatment
Class 1 — other secured claims	Unimpaired; paid in full or otherwise rendered unimpaired
Class 2 — other priority claims	Unimpaired
Class 3 — term loan claims	Impaired; pro rata new common stock, subject to dilution, and a potential new term loan facility
Classes 4–7 — non-Vertex GUCs, Vertex GUCs, 2027 convertible note claims, term loan deficiency claims	Impaired; beneficial interests in the GUC Trust, with a waterfall favoring Class 4 first
Existing equity	Impaired; canceled, no distribution

The GUC trust rested on a committee settlement. The Confirmation Order defines the settlement around creation of the trust and transfer of the GUC settlement assets, which included $2.225 million in cash plus any unused portion of the $34.2 million trade-claim allocation from the critical-vendor program, together with certain chapter 5 and related causes of action not otherwise released. The order also subordinated DIP deficiency claims to Classes 4 and 6 recoveries from the GUC settlement assets until those classes were paid in full. The Bullock confirmation declaration records that the settlement converted the official committee of unsecured creditors from an early objector into a plan supporter. The order also approved the plan's release, exculpation, and injunction framework.

Professional fees. The court approved final fee applications for the case professionals. Investment banker Perella Weinberg sought $8,823,649.16, including $8,731,774.19 in fees and $91,874.97 in expenses, for work spanning September 24 through December 20, 2024. Lead counsel Kirkland & Ellis sought $7,436,540.75 in fees and expenses, and Bracewell sought $1,701,899.49. Committee counsel Willkie Farr & Gallagher sought $1,205,742.79, and committee financial advisor AlixPartners sought $1,660,517.00 in fees.

New Board, Exit Financing, and Lender Ownership

Governance turned over at emergence. The Bullock confirmation declaration provided that the New Board would initially consist of five directors and that the prepetition Vertex board would be deemed to have resigned as of the effective date. The Fourth Amended Plan Supplement named four of the five initial directors in its Exhibit G: Eugene Davis of PIRINATE Consulting Group, Zachary Viders of BlackRock, Jacob Mercer of Whitebox Advisors, and Damon Meyer of Highbridge Capital Management, with the fifth seat left open at the time of filing.

The board composition tracked the recapitalization. The Fourth Amended Plan Supplement shows the Exit Facilities Commitment Letter executed by BlackRock Financial Management, Whitebox Advisors, and Highbridge Capital Management — the consenting term lenders who took the reorganized equity — alongside an exit term loan and an exit intermediation facility term sheet contemplating an amended and restated supply-and-offtake arrangement with Macquarie Energy North America Trading. Vertex's emergence release described exit financing commitments up to $100 million, including $40 million of initial borrowings upon emergence, said the reorganized company would operate as a privately held entity owned by certain lender funds, and announced the appointment of Mark Smith as chief executive officer as the prior CEO and CFO concluded their tenures.

Post-Emergence Claims Administration

Claims reconciliation moved to the reorganized debtor and the Vertex GUC Trust after the January 21, 2025 effective date. On a joint motion, the court approved omnibus claims objection procedures on April 30, 2025, authorizing batched objections and waiving certain Rule 3007(e) limits.

The trust began working down the claims pool that summer. On July 16, 2025, the GUC Trust filed its first and second omnibus objections, which together sought to expunge approximately $46.4 million of disputed general unsecured claims, while the trust also expected notices of satisfaction to reduce the pool by a further roughly $43.4 million in claims paid by post-petition payments, per its motion to further extend the objection deadline. That motion sought to extend the GUC Trust's deadline to object to general unsecured claims from January 16, 2026 to July 15, 2026. The reorganized debtor filed its own first and second omnibus claims objections on February 6, 2026, confirming that the claims pool was still being worked down more than a year after emergence.

Securities class action settlement. Vertex also reached a $6.3 million settlement in April 2025 to resolve a consolidated class action lawsuit alleging violations of the Securities Exchange Act of 1934 against the company and certain former officers.

Key Timeline

Date	Milestone
April 1, 2022	Vertex completes the Mobile refinery acquisition from Shell
May 9, 2024	Vertex announces it will pause renewable diesel and return the hydrocracker to conventional service
September 24, 2024	Chapter 11 petitions filed in Houston under a lender-supported RSA
September 25, 2024	Court enters the interim DIP order and the bidding procedures order
October 8, 2024	U.S. Trustee appoints the official committee of unsecured creditors
October 9, 2024	Hydrocracker restart in conventional service during the case
October 29, 2024	Court enters the Final DIP Order
November 17–18, 2024	Debtors file the first amended plan and the court approves solicitation
December 10, 2024	Debtors cancel the auction after receiving no qualified bid
December 20, 2024	Court enters the Confirmation Order on the second amended plan
January 13, 2025	Court approves the EPA/DOJ consent decree and environmental settlement
January 21, 2025	Plan effective date; lender ownership implemented and equity canceled
April 30, 2025	Court approves omnibus claims objection procedures
July 16, 2025	GUC Trust files omnibus objections seeking to expunge roughly $46.4 million of claims
February 6, 2026	Reorganized debtor files omnibus claims objections as reconciliation continues

Frequently Asked Questions

When and where did Vertex Energy file for chapter 11?

Vertex Energy filed chapter 11 petitions on September 24, 2024 in the U.S. Bankruptcy Court for the Southern District of Texas (Houston Division), lead case number 24-90507, before Judge Christopher M. Lopez. The filing was supported by a restructuring support agreement backed by 100% of its term loan lenders.

Why did Vertex Energy file for bankruptcy?

The Bullock First Day Declaration ties the filing to liquidity pressure following an underperforming renewable diesel conversion at the Mobile refinery, hydrogen-facility delays and cost overruns, dependence on continued trade-credit intermediation, and an accrued Renewable Fuel Standard burden estimated at roughly $72.3 million. Vertex needed a $25 million bridge loan in August 2024 to reach an orderly filing.

What happened to the marketed sale of Vertex's assets?

Perella Weinberg ran a 77-day marketing process reaching about 80 potential purchasers, but the confirmation declaration states no qualified bids arrived by the deadline. The debtors canceled the auction on December 10, 2024 and pursued the lender-led recapitalization, citing a valuation that did not exceed the DIP and term loan debt.

How much DIP financing did Vertex obtain, and why do some sources say "$80 million"?

Some sources described the DIP as $80 million, the new-money component. The McGovern declaration and Final DIP Order describe a larger package of up to $280 million that also included a $200 million roll-up of prepetition term loan obligations.

What did the confirmed plan do to Vertex's debt and equity?

The emergence release described deleveraging roughly $320 million of prepetition debt. The Confirmation Order gave term loan creditors pro rata new common stock, routed general unsecured classes into a GUC Trust funded with $2.225 million in cash plus causes of action, and canceled existing equity.

What did the EPA settlement require?

The order approving the consent decree required the reorganized debtors to retire 18,794,250 RINs by March 31, 2025, with reporting obligations and stipulated penalties for noncompliance. The debtors viewed the settlement as necessary to avoid a serious risk of liquidation if the EPA's confirmation objection were sustained.

Who is the claims agent for Vertex Energy?

Verita Global serves as the claims and noticing agent, authorized through the voluntary petition and maintaining the official claims register for the Southern District of Texas cases.

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