A Santa Maria oil company known for dozens of spills has filed for bankruptcy reorganization as a years-long federal court case — potentially bringing millions of dollars in civil penalties — nears conclusion.
The firm, most recently called HVI Cat Canyon Inc., filed the Chapter 11 action on July 25 in the U.S. Bankruptcy Court’s Southern District of New York.
Also known as Greka, Greka Oil & Gas and Greka California, the company has operations in Santa Barbara, Kern and Orange counties.
“The circumstances leading to the filing of the debtor’s Chapter 11 case are a reduction of revenues due to diminished oil and gas production and sales from debtor’s assets compounded by overreaching penalty assessments and debt obligations, including foreclosure proceedings noticed by a secured creditor for asset sales,” according to a declaration by Alex Dimitrijevic, the firm’s president and chief operating officer.
In the court filing, the company cites between 1,000 and 5,000 creditors, and claims assets between $100 million and $500 million.
The firm’s estimated liabilities also range from $100 million to $500 million, according to the court documents.
The largest secured claim cited in the filing is UBS AG, London Branch at $114 million. Also in the top five of secured claims is the Santa Barbara County Treasurer-Tax Collector with a $1.3 million claim identified as a lien for property taxes.
Greka’s financial woes were felt in an Orcutt neighborhood after residents said notices had been posted warning of a trustee’s sale, regarding mineral rights, due to HVI Cat Canyon’s debts to UBS AG.
Notices claimed the auction would occur at the main entrance to the Santa Barbara Courthouse at 1 p.m.. Aug. 21.
Among the list of creditors with largest unsecured claims are the Santa Barbara County Treasurer-Tax Collector at $3.35 million, the Santa Barbara County Air Pollution Control District at nearly $1.1 million, and the Santa Barbara County Planning & Development Department at $703 million.
Despite the filing, the company, which has approximately 50 employees, said it planned to operate its business for the 30 days after the bankruptcy.
Greka’s bankruptcy document also listed 14 actions and proceedings of judgment or property seizures the firm already or may eventually face.
They included the federal case filed in 2011 by the U.S. government, state of California and a number of other plaintiffs seeking millions of dollars in civil environmental penalties.
The bankruptcy has prompted U.S. government attorneys in the federal civil lawsuit to challenge an automatic stay in their case, saying it would be inapplicable, and asking the court to proceed with issuing its decision following the bench trial held in this matter last fall.
The motion filed by the U.S. attorneys said the case should proceed, calling it “an exercise of their police and regulatory powers that seeks to protect human health and the environment to remedy violations of state and federal laws, by deterring further violations.
“The message that HVI and others should receive is that they cannot use bankruptcy as a safe haven from compliance with environmental laws or actions in district courts to enforce environmental law,” the U.S. attorneys said.
In July, the judge said a decision would come no later than Oct. 31.