Opinion ID: 660174
Heading Depth: 2
Heading Rank: 2

Heading: The Vitol Agreement

Text: 4 Haseotes owns all of the stock of Newfoundland Energy Limited (NEL), a Bermuda Corporation. NEL in turn owns all of the stock of Newfoundland Processing, Ltd. (NPL), a Canadian corporation, that owns an oil refinery in Canada. On October 5, 1992 Haseotes entered into an agreement with Vitol to sell all of his stock in NEL to Vitol for $125 million plus an earn out worth up to $25 million. The agreement is expressly conditioned on Haseotes' settling all claims against NPL. 5 At the time of the Vitol agreement, the claims asserted against NPL were in excess of $200 million. Of this amount, $76.1 million comprised uncontested debts. Another $92 million was claimed by Cumberland Farms, a company in which Haseotes owns 25 percent, the remainder being owned by his relatives. Cumberland Farms is now a Chapter 11 debtor-in-possession. Included in Cumberland Farms' claim against NPL is a sum allegedly due on $52 million in advances made to Cumberland Crude Processing, Inc. (Cumberland Crude), a company in which Haseotes is a 100 percent beneficial owner. Cumberland Farms asserted this claim against NPL because NPL had guaranteed Cumberland Crude's debt on which that company had defaulted. Finally, intervenor J. Aron & Co. (Aron) claimed that it was owed $44 million by NPL for its alleged wrongful conversion of oil refined for Aron at the NPL refinery. Although prior to the Vitol agreement Aron had commenced a wrongful conversion action against Cumberland Crude, Cumberland Farms, NPL, and Haseotes as guarantor of Cumberland Crude's liability for up to $33 million, it asserted the entire amount allegedly due against NPL, because NPL agreed in writing not to dispose of the refinery's assets prior to satisfying Aron's claim. 6 In an attempt to meet the conditions of the Vitol agreement, Haseotes entered negotiations with Cumberland Farms and Aron, and reached agreements with both as to settlements of their respective claims against NPL. Cumberland Farms agreed that if the Vitol agreement went through, it would settle all of its claims against NPL for $23 million plus any earn out, up to another $25 million. During his negotiations with Cumberland Farms, Haseotes entered an agreement with the other shareholders in which each shareholder agreed not to receive directly or indirectly any money or other consideration or proceeds with respect to the sale of the NEL stock, or from any claim he or she might have against Cumberland Crude, NPL or NEL. There is some evidence that NPL owed Haseotes between $10-20 million. Thus, by entering this agreement, Haseotes relinquished any right he might have had to recover this purported debt. Haseotes' negotiations with Aron resulted in an agreement to settle Aron's claims against NPL for $30 million and a release of any alleged liability from Haseotes. Aron also agreed to give releases to NPL, Cumberland Crude, Cumberland Farms and Haseotes.