Active and unpaid construction work claims worth nearly $83 million are among the latest disputes at Houston-based Permico Midstream Partners Holdings’ troubled natural gas pipeline project.
Since March of 2020, at least one subcontractor tasked with assisting in the construction of two natural gas liquids (NGL) pipelines spanning 856 miles in southwest Texas has filed two separate mechanics lien claims on the property.
The larger of the two pipelines stretches from Monahans, TX to Corpus Christi, TX, which is known as the Compañero Pipeline. The second pipeline, called the Simpatico Pipeline, is located between Corpus Christi and Mount Belvieu, TX. An active mechanics lien claim prevents a property’s sale or refinancing until the claimant has been paid.
Aside from the unpaid work claims, property owner Permico Energia – parent company of Permico Midstream Partners Holdings – is also tangled in a bankruptcy filing and litigation with their unpaid subcontractor, Corpac Steel. In May of 2020, Permico Midstream Partners Holdings filed for Chapter 11 bankruptcy.
Corpac Steel, which is headquartered in Aventura, FL, filed litigation against Permico Midstream Partners Holdings in May of 2020 with the U.S. Bankruptcy Court for the Southern District of Texas Houston Division. Corpac Steel’s filing was a complaint to recover from their involvement at the project.
Corpac Steel originally filed their two lien claims in March of 2020 within five Texas counties where the pipeline crossed. Texas mechanics lien rules require claimants to file with the recorder’s office in the county where the property is located. On May 20, 2020, Corpac Steel filed mechanics lien claims in two additional Texas counties.
In total, Corpac Steel has filed their unpaid work claims in seven Texas counties that Permico’s pipeline crosses, including Duval County, Jim Wells County, La Salle County, McMullen County, Nueces County, Refugio County, and San Patricio County.
One Contractor Claims $82.9M at Permico’s Texas NGL Project
Corpac Steel is owed a combined $82,999,760 in lien claims for their work in constructing both the Compañero Pipeline and the Simpatico Pipeline.
On March 30, 2020, the subcontractor placed both of their original mechanics lien claims against Permico Midstream Partners Holdings.
The largest lien claimed $65,845,121, while the second lien was valued at $17,154,639.
Each lien involves separate instances of Corpac Steel fabricating line pipes of varying lengths. According to the lien affidavit, the Corpac Steel fabricated the pipe between May and October of 2019.
Permico’s May 2020 Bankruptcy Filing and Ongoing Litigation with Corpac Steel
On May 4, 2020, Permico Midstream Partners Holdings filed for Chapter 11 bankruptcy.
According to a report from the Houston Business Journal from September of 2020, Permico’s bankruptcy has been contentious since its May filing.
The report states that Permico Energia filed a motion to dismiss the bankruptcy on May 8, 2020.
The motion took place after Permico Midstream Partners Holdings’ newly appointed chief restructuring officer filed for Chapter 11. The chief restructuring officer had recently been appointed by Permico Midstream’s board of directors.
However, the Houston Business Journal reports that designees of the Hanwha Group, a South Korean business conglomerate that has financed the project, recently replaced the members of Permico’s Board of Directors.
These conditions led Permico Energia to take legal action. Hanwha Group is now reportedly claiming that a breach of contract with Permico Energia — over their financing deal for the project — should give them control over Permico Midstream. Permico Energia claims that the Hanwha Group breached first, according to the Houston Business Journal.
Meanwhile, Corpac Steel’s complaint filing from May 12, 2020 includes a “Relief Requested” section that documents the subcontractor’s legal arguments regarding their lien filings.
The filing states that Corpac Steel is seeking “four forms of relief” from Permico Midstream Partners Holdings, including the return of 1,759,253 linear feet of steel pipe fabricated for the property owner that has yet to be paid for.
856 Combined Miles of Natural Gas Pipelines in Texas
The Compañero Pipeline spans 510 miles of 24-inch NGL pipeline.
According to Permico Energia, the Simpatico Pipeline includes two separate projects, known as the Mont Belvieu Pipeline and the Markham Pipeline. Both pipelines transmit ethane and propane.
The Mont Belvieu Pipeline spans 230 miles with a 20-inch bi-directional pipeline. The Markham Pipeline spans 116 miles with a 16-inch bi-directional pipeline.