PETROPLUS, Europe’s largest independent refiner by capacity, has filed for insolvency after talks with its lenders broke down. This has raised fears for the future of one of the UK’s largest refineries and a key source of petrol for London and the southeast of England.

Analysts said Petroplus’s administrators might struggle to find buyers for some of its plants in a market that has long suffered from overcapacity, poor profit margins and weak demand for petroleum products amid Europe’s economic downturn.

Petroplus, based in Zug, Switzerland, was forced to close down three of its refineries this month after lenders froze the credit lines it needed to buy crude. It had been in talks with the banks to reopen the lines and had reached a temporary deal that kept Coryton and another refinery in Ingolstadt, Germany, in operation.

However, Petroplus said yesterday that the talks had failed. Lenders had put the company on notice to pay off its debts, triggering a default on $1.75 billion of senior notes and convertible bonds. The company said it was now moving to shut down operations and file for insolvency. – Copyright The Financial Times Limited 2012