Bioenergy of America Chapter 11 restructuring collapses; heads for liquidation

In New Jersey, a federal bankruptcy judge dismissed the Chapter 11 case of Bioenergy of America after the company was unable to pay administrative expenses associated with continued operation and the bankruptcy filing. With the withdrawal of a proposed $400,000 loan from Paragon Biofuels to fund continuing operations, the company does not have sufficient cash to pay employees, who have been working since early January without salary. The company appears headed for liquidation.

Bioenergy of America filed for bankruptcy last month, listing assets of $1-$10 million and debts of $10-$50 million. The company represented 15 percent of US biodiesel supply in 2005, but was hit hard by the rise in soy feedstock prices and flat biodiesel prices.

The bankruptcy announcements was the first since Nebraska-based E3 BioFuels plant filed for bankruptcy last month after mechanical problems made the rate of production unprofitable. The plant has shut down production pending reorganization. The plant, which opened in June, was one of the first to use a “closed-loop” system where methane from 28,000 head of cattle was used to provide power to the plant, and distillers grains from ethanol production were fed to the cattle. A boiler explosion was blamed primarily for the loss in production capacity.

Earth Biofuels successfully reorganized itself in the second half of 2007 after several creditors petitioned for a Chapter 7 liquidation.

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