The list of grain companies not paid by Abengoa Bioenergy corn-ethanol plants continues to grow, as another group of sellers filed an involuntary Chapter 7 bankruptcy petition, this time in the U.S. Bankruptcy Court in Kansas.
There’s a mad scramble by Abengoa creditors in the United States to recover millions of dollars for unpaid corn deliveries to plants in Nebraska, before Spain-based Abengoa SA sells off its ethanol assets as part of what is expected to be a massive company restructuring in the face of more than $8 billion in debt.
Involuntary Chapter 7 — or liquidation — petitions now have been filed in both Kansas and Nebraska as concerns mount that now more than $10 million in grain purchases by Abengoa will not be paid to multiple grain companies before the parent company Abengoa SA sells ethanol plants across the world at some point.
In the latest petition filed Thursday in U.S. Bankruptcy Court in Kansas — the state where Abengoa formed a limited liability corporation in the United States — a group of creditors including two additional Nebraska grain cooperatives said Abengoa’s York, Nebraska, plant secured some $33 million in financing in April 2015. The concern is the money will be funneled to Abengoa’s parent company before companies owed grain are paid.
The new petition was filed by Omaha-based Gavilon Grain LLC — which filed a similar petition in Nebraska — along with Farmers Cooperative in Dorchester, Nebraska, and Central Valley Ag Cooperative in York, Nebraska. Those three companies say they are owed about $3.2 million total for grain delivered to the Abengoa plant in York, having not been paid dating back to early August, according to court documents.
“Gavilon suspects that some or all of the proceeds of this loan ($33 million) were also then sent upstream to the debtor’s ultimate parent in Spain as part of its central treasury function,” according to court documents.
“As such, petitioning creditors are concerned that the assets will be sold in an expedited manner with the proceeds of any such sale retained by the parent in Spain rather than used to satisfy the debtor’s U.S. creditors…Debtor has previously told those creditors that cash retention by the parent in Spain has been part of the cause of the debtor’s prior inability to pay them.”
Also on Thursday, the creditors filing the petition in Kansas also filed a motion to limit Abengoa’s power to sell its assets, obtain new secured loans, or to appoint an interim trustee. In bankruptcy cases, interim trustees are appointed to organize how assets are divided among creditors. The same motion was filed as part of the court proceedings in Nebraska.
Farmers Cooperative in Dorchester, Nebraska, filed suit against Abengoa in Nebraska District Court on Dec. 1, 2015, for unpaid corn deliveries, according to documents filed as part of the Kansas petition.
Earlier this week, Gavilon, along with Ravenna, Nebraska-based Farmers Cooperative Association; and Maumee, Ohio-based The Andersons Inc., reached an agreement with Abengoa that the company would not sell ethanol assets or acquire additional debt financing while the involuntary Chapter 7 petition is pending in Nebraska. According to that petition, Abengoa owes about $4.1 million for grain purchased by its ethanol plants.
Abengoa Bioenergy can contest the petition for involuntary Chapter 7. Chapter 7 is filed to liquidate assets to pay off creditors. In addition, CHS Inc. sued Abengoa in December, claiming the company had not paid nearly $5 million for some 2 million bushels of corn delivered to three different Abengoa ethanol plants in Nebraska and Kansas.
During a court hearing Wednesday in Nebraska, an attorney for Abengoa said the company would not sell its assets or seek more secured debt to finance its operations at an idled ethanol plant in Ravenna, Nebraska. Abengoa hopes to restart production at that plant at some point. The Abengoa ethanol plant in York also has been idled for some time.
So far, the parent company has indicated it plans to sell off a large portion of its business to stave off creditors. Abengoa SA has until the end of March to either file bankruptcy in Spain or announce a restructuring plan to the Spanish government.