HVI Cat Canyon bankruptcy case shifts to California court

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REPEATED SPILLS: HVI Cat Canyon, formerly known as Greka Energy, filed for bankruptcy on July 25. The company has allegedly been responsible for numerous oil spills at its facilities, including one that affected Firestone Vineyard in 2008.

The bankruptcy case for HVI Cat Canyon, formerly known as Greka Energy, is on the move—at least geographically. 

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After filing for bankruptcy in the Southern District of New York U.S. Bankruptcy Court on July 25, HVI Cat Canyon’s case was transferred first to Texas and then to California.

On Aug. 14, Santa Barbara County and its Air Pollution Control District filed a motion—that state agencies and other parties later joined—requesting the case get moved to California. 

“[HVI Cat Canyon] has no existence in the Southern District of New York and has its entire existence in the Central District of California with the exception of its corporate domicile in Colorado,” the county’s motion states.

HVI Cat Canyon objected to the move and instead suggested the case be transferred to a bankruptcy court in Texas, where one of HVI’s affiliates has a case pending. On Aug. 28, a judge signed off on an order transferring the case to Texas. 

During a hearing on Sept. 10 in Texas, several parties involved with the bankruptcy case again requested it be transferred to California, according to a status report HVI filed on Sept. 19. A judge officially signed an order transferring the case to the Northern Division of the Central District of California U.S. Bankruptcy Court on Sept. 12.

About a week later, the county filed another motion regarding HVI’s use of cash collateral to continue paying salaries and other operating expenses during the bankruptcy proceedings. In a Sept. 19 motion, the county claimed HVI owes county agencies more than $7.4 million in regulatory costs and tax debts. 

“[HVI Cat Canyon] cannot continue to operate without funding the regulatory oversight needed for safe operations,” the county’s motion states. “The county and [Air Pollution Control District] cannot continue providing that regulatory oversight for free.”

In HVI’s July bankruptcy petition, the company’s president and chief operating officer, Alex Dimitrijevic, cites numerous factors contributing to the company’s bankruptcy filing. 

“The circumstances leading to the filing … are a reduction in revenues due to diminished oil and gas production and sales from [HVI Cat Canyon’s] assets compounded by overreaching penalty assessment and debt obligations including foreclosure proceedings … for asset sales,” the petition states.

The petition doesn’t cite the specific penalty assessments contributing to its financial troubles. However, last year the state ordered the company to pay more than $12 million in fines. The California Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (DOGGR) issued the fine about one year after serving the company with a stop-injection order because of its failure to comply with regulations at an oil field the company operates in Orange County.

On Aug. 27, the company filed a motion to sell its Richfield East Dome Unit in Orange County. According to court documents, U.S. Bankruptcy Judge Martin Barash denied this motion on Sept. 29. In the status report HVI filed in September, it states that it plans to sell all or a substantial amount of its assets. 

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