Abengoa's Hand May Be Forced

Grain Providers Seek to Force Company into Involuntary Chapter 7 Bankruptcy

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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In addition to ethanol plants in North America and Europe, Abengoa owns a commercial cellulosic ethanol plant in Hugoton, Kansas. (DTN file photo by Chris Clayton) (DTN file photo by Chris Clayton)

OMAHA (DTN) -- Creditors who have not been paid for corn deliveries are trying to force Abengoa Bioenergy Nebraska into involuntary Chapter 7 bankruptcy, according to a petition filed this week in Nebraska.

Omaha-based Gavilon Grain, LLC; Ravenna, Nebraska-based Farmers Cooperative Association; and Maumee, Ohio-based The Andersons, Inc., indicate in the petition Abengoa owes about $4.1 million for grain sold to Abengoa ethanol plants.

"I don't have any details, but coffee-shop talk is that creditors want to get paid sooner rather than later and they, as well as potential acquirers of the assets, are concerned about standing once these assets get tied up with international legal issues in jurisdictions far from here," said Todd Sneller, administrator of the Nebraska Ethanol Board.

Abengoa Bioenergy's parent company, Abengoa SA based in Spain, recently announced plans to sell its ethanol plants in North America and Europe.

So far, the parent company has indicated it plans to sell off a large portion of its business to stave off creditors who are owed some $8 billion. Abengoa has until the end of March to either file bankruptcy in Spain or announce a restructuring plan to the Spanish government.

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Abengoa Bioenergy can contest the involuntary petition for 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.

This week the three companies filing the petition 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. Abengoa operates plants in Ravenna and York, Nebraska.

According to the motion, on Dec. 9, 2015, Abengoa held a meeting with several of its unpaid grain suppliers including the companies filing the petition. During the meeting, according to the motion, Abengoa said grain suppliers would not be receiving payment in the near future.

"Debtor also stated that although it would try to pay its creditors if it could, the debtor was unable to make any payments at this time or in the foreseeable future," the motion said.

Because Abengoa SA announced plans to sell off its ethanol assets, the three companies filing the petition expressed concern such a sale would take place without payments being made for grain sold to Abengoa.

"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," the motion filed Thursday said. "As the petitioning creditors' supporting declarations state, debtor has previously told those creditors that cash retention by the parent in Spain has been the cause of the debtor's prior inability to pay them."

So far, court documents indicate Abengoa has not paid for at least $9 million in outstanding corn deliveries to the company's ethanol plants.

DTN attempted to contact Abengoa SA for comment but had not received a response at the time this article was posted.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @ToddNeeleyDTN

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Todd Neeley

Todd Neeley
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