Europe’s largest independent oil refiner, Petroplus, said it is filing for insolvency after failing to work out a deal with the banks to which it owes 1.4 billion euros.
The move puts over 2,000 jobs across Europe at risk.
“We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets,” Petroplus Chief Executive Jean-Paul Vettier said in a statement.
It has reportedly halted all supplies from its Coryton refinery in southern England and stopped output at three refineries in Switzerland, France and Belgium.
The company, which has facilities in France, Germany, Belgium and Switzerland, borrowed heavily to buy the Coryton refinery from BP four years ago.
It got into trouble because of thin profit margins in oil refining and high debt that was a result of its private equity-backed business model.
Petroplus’s Ingolstadt refinery in Germany continues to supply the market with fuel, a trade source said on Tuesday. It recently cut output to half the normal level, as did Coryton.
Administrators will struggle to find buyers for the refineries in a market plagued by overcapacity.
A dismal outlook for the European crude processing industry, amid falling fuel demand, has prompted several companies to put assets on the market. But even rock-bottom prices have failed to attract bidders, even for good quality facilities.
Asian companies, which may be interested in establishing a European oil trading operation, are seen as possible buyers, or Russian companies that want to secure an outlet for their crude oil.