US biodiesel producer goes bankrupt

09 January 2008 20:03  [Source: ICIS news]

HOUSTON (ICIS news)--Rising soy oil costs and sluggish biodiesel prices pushed Bioenergy of America into bankruptcy, a lawyer said on Wednesday.

Bioenergy, a US producer of biodiesel, filed for protection from creditors under Chapter 11 of the US bankruptcy code, meaning that the company can continue operating while it reorganises.

Tightening margins led the company into bankruptcy, said Richard Weltman, the company's bankruptcy lawyer.

Bioenergy's main feedstock is soybean oil, which has dramatically increased in price, he told ICIS.

Feedstock soybean oil prices have soared above 40 cents/lb ($882/tonne), a level that biodiesel producers consider the limit to sustain workable margins, according to global chemical market intelligence service ICIS pricing.

Weltman said that biodiesel prices in the US have not kept up with costs.

Midwest prices for biodesel were $4.01-4.12/gal FOB (free on board) up from $3.00-3.10/gal a year ago.

Bioenergy's plants are still operating however, and Weltman said several people are interested in helping finance the company.

"We are actively trying to preserve the going-concern value of the company and the technology and intellectual property," he said.

One creditor is Paragon Biofuels, a company listed in the bankruptcy proceedings in care of MSD Capital.

MSD Capital is an investment group that handles the personal fortune of Michael Dell, founder of the namesake computer giant.

Weltman would make no comments in regards to MSD Capital. Neither MSD nor Bioenergy immediately returned calls seeking comment.

Bioenergy listed assets of up to $10m (€6.8m) and liabilities of at least $11m.

The largest creditor listed in the proceedings was Paragon Biofuels, which was owed $7.6m.

($1.00 = €0.68)

By: Al Greenwood
+1 713 525 2653

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