Getty trustee seeks confirmation of $230.4 million award to Bionol

By Jim Witters

Wilmington, Del., March 7 - Getty Petroleum Marketing Inc.'s Chapter 7 trustee has asked the court to confirm a $230.4 million arbitration award against the company, and Getty moved to vacate the arbitrator's decision, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

Alfred T. Giuliano, the Chapter 7 trustee for the case, asked the court to confirm the award to Bionol Clearfield, LLC and allow Bionol's claim.

The dispute arose in connection with an agreement Getty entered into in 2007 with Bionol to buy 108 million gallons of ethanol a year for five years.

The agreement calls for binding arbitration of any dispute.

The arbitration panel's decision came after four weeks of hearings in 2011, according to court documents.

The award originally was made on July 18, 2011, but Getty "has repeatedly refused to voluntarily satisfy the award," according to court documents.

A motion to vacate is not an occasion to review the arbitration award, the trustee wrote in his motion.

The motions were prompted by Bionol's filing of a proof of claim on Feb. 8, which Getty calls "the largest unsecured claim against the Debtors' chapter 11 estates."

Getty is disputing the claim.

In its motion seeking to vacate the award, Getty argues that

• Bionol never provided adequate notice of cancellation of its agreement after Getty breached the contract;

• Bionol continued to demand Getty's performance under the contract for the following five months; and

• Bionol performed under the agreement.

Those factors "reinstated the agreement," which remained in effect until Bionol breached it on Nov. 1, 2010, and Getty terminated it on Dec. 26, 2010, the debtors' court documents state.

Getty claims Bionol's damages, if any, should be limited to $22.6 million, which is the amount Getty withheld for shipments received between June 1, 2010 and Oct. 31, 2010.

The arbitration panel "ignored clear, well-defined and explicitly applicable law, leading to an erroneous outcome," Getty claims.

A hearing on the matter is scheduled for 10 a.m. ET on April 2.

Getty Petroleum, an East Meadow, N.Y., distributor of motor and heating fuels, filed for bankruptcy on Dec. 5. Its Chapter 11 case number is 11-15606.

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