New York, January 24 (FinanceEnquiry.com) - Petroplus, Europe's largest independent refiner by capacity, is preparing to file for insolvency, as talks with its lenders have failed. The refiner made the announcement a day after its UK refinery Coryton was suspended from trading in the company’s shares in Switzerland, as it had lost 99 percent of it's value since 2007. Moreover the refinery, which is an important source of petrol for London and the south-east, has stopped deliveries.

The economic slowdown in Europe has weakened demand for transport fuel and throttled profit margins, leading to chronic overcapacity in the industry and affecting the finances of European refiners. The Zug, Switzerland-based Petroplus lost access to about $1 billion in credit lines last month, due to which, it has been pushed towards bankruptcy. As a result, the refiner closed down three of its refineries and the remaining two have been running at reduced capacity.  

Over the past few weeks, Petroplus has been negotiating with its lenders to get the credit lines operative again, so that it could keep its refining operations moving. However, the talks were unsuccessful and the banks on Monday served “notices of acceleration, commenced enforcement actions and appointed a receiver” for the company's UK assets. Petroplus was left with no other option but to shut down operations and file for insolvency in Switzerland.