NEW YORK (Reuters) - Real estate developer Hilco Redevelopment Partners has entered into a $240 million agreement to purchase the Philadelphia Energy Solutions (PES) oil refinery, which was the largest and oldest on the East Coast, according to court documents on Wednesday.

FILE PHOTO: The Philadelphia Energy Solutions oil refinery is seen at sunset in front of the Philadelphia skyline March 24, 2014. REUTERS/David M. Parrott/File Photo

Chicago-based Hilco submitted the winning bid, which includes an escrow amount of $30 million, in an auction last week for the Philadelphia site, documents filed with the U.S. Bankruptcy Court for the District of Delaware show.

The sale still needs to be approved by the bankruptcy court, and Los Angeles-based developer Industrial Realty Group, LLC, was selected as the backup bidder, the documents show.

The plan is scheduled to be submitted to the court for approval on Feb. 6, and PES can withdraw the sale plan at any time before then.

The refiner filed for bankruptcy in July last year and put its 335,000-barrel-per-day plant up for sale a month after a fire and explosions destroyed part of the refinery.

Hilco, which has acquired 5,000 acres (2,023 hectares) in North America, specializes in redeveloping obsolete industrial sites, dimming the prospect that the PES complex will be resurrected as an oil refinery.

Philadelphia Mayor Jim Kenney said in a statement the city is optimistic Hilco will develop the more than 1,300-acre site in a way that is more environmentally friendly and contributes to the regional economy, but it expects challenges and years of work ahead.

“We welcome the selection of Hilco Redevelopment Partners as the winning bidder for the refinery site,” Kenney said.

City officials met with bidders during last week’s auction and were briefed on the track records of the various parties, but they were not given specific details of the proposals.

Hilco did not respond to requests for comment on its plans for the South Philadelphia site, which has been used to store and process hydrocarbons for about 150 years.

However, a stakeholder who was briefed by Hilco representatives in the days prior to the auction said the company intended to use part of the site for light industrial purposes, including storage.

A sale to a real estate developer, either Hilco or IRG, does not preclude former bidders from leasing space on the site, according to two sources familiar with other proposals for PES.

More than a dozen groups showed initial interest in buying PES, but only one publicly stated intentions to revive the site as an oil refinery at full capacity.

That group, led by former PES Chief Executive Officer Phil Rinaldi, was not a finalist. It is attempting to partner with one of the real estate groups in a lease agreement, two sources familiar with the plan said. Rinaldi could not be reached for comment.

S.G. Preston Co, a biofuels company based in Philadelphia, is also expected to seek a lease agreement with the next owner, according to a source familiar with the situation.

With PES’s closure, more than 1,000 workers were laid off, including 640 local United Steelworkers members.

Many former PES workers held out hope that the plant would be restarted, said former USW Local 1-10 leader Ryan O’Callaghan. With the prospect of a real estate owner, however, many of those workers are expected to consider moving out of state to find similar work, O’Callaghan said.

“Some hard decisions are going to be made by a lot of families,” he said.