Collapse of Prax Group's Lindsey Oil Refinery: A Debt-Driven Downfall

In early May 2025, the energy sector was jolted when Prax Group, the owner of the Lindsey oil refinery in North Lincolnshire, declared its impending insolvency, putting 625 jobs at risk and raising alarms about potential disruptions to fuel supplies across the UK. This catastrophic turn of events shocked government officials, who had previously received assurances from Winston Soosaipillai, the company’s sole director, that the firm was not in imminent danger despite underlying financial issues.

The Lindsey refinery, situated on the Humber estuary, accounts for nearly 10% of the UK's refining capacity and is essential for supplying fuel to critical infrastructures, including major airports. As reported by the Financial Times, Prax owed up to £250 million to HM Revenue and Customs, a factor that contributed to its financial collapse.

The sudden demise of Prax has been described by insiders as a predictable outcome of a business model built on excessive debt and rapid expansion. According to a former employee, issues had been brewing long before the government's awareness of Prax's precarious situation, with cost-cutting measures including layoffs and asset sales beginning in March 2024.

The company’s growth trajectory was remarkable yet fraught with peril. Established in 1999, Prax expanded from a single petrol station to a multinational enterprise with billions in revenue, largely fueled by strategic acquisitions, including the purchase of the Lindsey refinery from Total for $170 million in 2021. However, this acquisition significantly increased the company's liabilities, soaring to $2.3 billion by 2024, with annual interest payments ballooning from $19 million to $133 million over the same period.

Despite the heavy debt burden, Prax's owners, Winston and Arani Soosaipillai, extracted approximately £11.5 million in pay and dividends since acquiring the Lindsey facility, raising concerns among stakeholders about financial mismanagement.

Alan Gelder, a refining expert at Wood Mackenzie, noted that while the refining margins had seen improvement in the first half of 2025, the collapse of Prax was unexpected. 'Lindsey was an okay asset, probably cash positive,' he explained, highlighting a disconnect between market conditions and the company's internal operations.

The UK government, responding to the crisis, has initiated an investigation into the conduct of the company's directors, primarily focusing on Soosaipillai. The insolvency service's inquiry may shed light on the governance practices at Prax, which some former employees describe as insular and opaque.

As government officials scramble to find a buyer to rescue the refinery, employees face an uncertain future, waiting for clarity on their jobs and the operational viability of the Lindsey facility. The Prax Group's collapse serves as a stark reminder of the risks associated with high-leverage business strategies in an increasingly volatile energy market.