An aerial shot of the ethanol production facility in Hopewell. Map via Google.
The bankrupt former operator of an ethanol plant in Hopewell has a plan to liquidate its assets, but there likely won’t be much left over for creditors.
Vireol Bio Energy, which operated the 55-acre ethanol production facility at 701 S. Sixth Ave. in Hopewell until a sale last October and entered bankruptcy shortly thereafter, filed its Chapter 11 plan of liquidation earlier this month, showing it has about $1.5 million in assets that could potentially be recovered.
Bankruptcy court documents list what amounts to a best-case and worst-case scenario for most of VBE’s creditors: there will either be $0.05 or $0.29 for every $1 owed by the company.
That range depends on how a web of companies set up to own and operate the facility is unwound in court. VBE’s largest creditor by far is Future Fuels No. 1 LLP, a U.K. company that owned the Hopewell facility and leased it back to VBE. It has a claim for $20 million of VBE’s $28 million in debt. Vireol Bio Energy Holdings, another English company set up to own VBE, has a claim against it for $3.7 million. Future Fuels owned much of VBE Holdings, court records show.
While they’re all technically separate legal entities, VBE’s creditors have filed lawsuits arguing that the VBE and Future Fuels companies are all ultimately connected and therefore all responsible for the debts.
As a sort of olive branch and to exert some leverage, court records show VBE and Future Fuels have negotiated a settlement to eliminate Future Fuels’ $20 million claim, in exchange for an agreement that the remaining creditors will not attempt to sue the company in the future.
The creditors include local contractors, the City of Hopewell and a division of Dominion Resources.
A motion to approve the settlement was filed earlier this month, and the matter is set to be heard June 1. The plan also calls for VBE Holdings’ claims to be wiped out if the Chapter 11 plan is approved.
That means worst case for the unrelated creditors is that Future Fuels’ claim is allowed, leaving only about $0.05 on the dollar for all who are owed money by VBE.
If Future Fuels’ claim is eliminated through the settlement, there will likely be about a potential payback of $0.29 on each claim dollar. That’s not to mention $260,000 in estimated administrative costs – such as paying attorneys.
The $1.5 million in VBE assets to be recovered include $26,000 in cash on hand, a company car, $65,000 in insurance premium rebates and $850,000 from 12 so-called preference claim actions, which are mini-lawsuits filed by VBE seeking to recoup money paid out to various parties in the 90 days prior to and after the bankruptcy filing in December.
The biggest remaining potential asset is $750,000 from a state incentive program that VBE says it qualifies for. The company participated in the Commonwealth of Virginia Biofuel Incentive Grant program in 2015. It allows for a payment of $0.03 per gallon of biofuels sold by facilities in the state during that year.
Attorney Bruce Arkema of DurretteCrump is representing Vireol. He said VBE has applied for the grant money.
VBE’s Chapter 11 case stems from an attempt by its creditors late last year to force it into Chapter 7 bankruptcy. The company ultimately put itself into Chapter 11, while it worked out a plan to deal with its debts and search for remaining assets.
The ethanol facility in question was built by another company in 2010 to convert corn and other grains into ethanol as a fuel additive.
Future Fuels bought it in 2013, and VBE began operations there in 2014, after being offered numerous state and local incentives. It ceased operations at the plant less than two years later, just prior to selling it to Omaha, Nebraska-based Green Plains.
Bankruptcy documents show the plant produced $78.56 million in revenue in its fiscal year 2014. That dropped to $35.11 million the following year, during which the plant was operating at a loss of nearly $13 million.
Its downfall, according to court documents, was fueled by declining oil prices and rising corn prices.
“In other words, the ‘perfect storm’ hit in 2015: ethanol prices dropped, and corn prices increased,’” bankruptcy courts state.
The city of Hopewell and the state said last year they were looking into whether some of that money – separate from the incentive money – should be paid back, given the company’s lack of long-term performance.
An aerial shot of the ethanol production facility in Hopewell. Map via Google.
The bankrupt former operator of an ethanol plant in Hopewell has a plan to liquidate its assets, but there likely won’t be much left over for creditors.
Vireol Bio Energy, which operated the 55-acre ethanol production facility at 701 S. Sixth Ave. in Hopewell until a sale last October and entered bankruptcy shortly thereafter, filed its Chapter 11 plan of liquidation earlier this month, showing it has about $1.5 million in assets that could potentially be recovered.
Bankruptcy court documents list what amounts to a best-case and worst-case scenario for most of VBE’s creditors: there will either be $0.05 or $0.29 for every $1 owed by the company.
That range depends on how a web of companies set up to own and operate the facility is unwound in court. VBE’s largest creditor by far is Future Fuels No. 1 LLP, a U.K. company that owned the Hopewell facility and leased it back to VBE. It has a claim for $20 million of VBE’s $28 million in debt. Vireol Bio Energy Holdings, another English company set up to own VBE, has a claim against it for $3.7 million. Future Fuels owned much of VBE Holdings, court records show.
While they’re all technically separate legal entities, VBE’s creditors have filed lawsuits arguing that the VBE and Future Fuels companies are all ultimately connected and therefore all responsible for the debts.
As a sort of olive branch and to exert some leverage, court records show VBE and Future Fuels have negotiated a settlement to eliminate Future Fuels’ $20 million claim, in exchange for an agreement that the remaining creditors will not attempt to sue the company in the future.
The creditors include local contractors, the City of Hopewell and a division of Dominion Resources.
A motion to approve the settlement was filed earlier this month, and the matter is set to be heard June 1. The plan also calls for VBE Holdings’ claims to be wiped out if the Chapter 11 plan is approved.
That means worst case for the unrelated creditors is that Future Fuels’ claim is allowed, leaving only about $0.05 on the dollar for all who are owed money by VBE.
If Future Fuels’ claim is eliminated through the settlement, there will likely be about a potential payback of $0.29 on each claim dollar. That’s not to mention $260,000 in estimated administrative costs – such as paying attorneys.
The $1.5 million in VBE assets to be recovered include $26,000 in cash on hand, a company car, $65,000 in insurance premium rebates and $850,000 from 12 so-called preference claim actions, which are mini-lawsuits filed by VBE seeking to recoup money paid out to various parties in the 90 days prior to and after the bankruptcy filing in December.
The biggest remaining potential asset is $750,000 from a state incentive program that VBE says it qualifies for. The company participated in the Commonwealth of Virginia Biofuel Incentive Grant program in 2015. It allows for a payment of $0.03 per gallon of biofuels sold by facilities in the state during that year.
Attorney Bruce Arkema of DurretteCrump is representing Vireol. He said VBE has applied for the grant money.
VBE’s Chapter 11 case stems from an attempt by its creditors late last year to force it into Chapter 7 bankruptcy. The company ultimately put itself into Chapter 11, while it worked out a plan to deal with its debts and search for remaining assets.
The ethanol facility in question was built by another company in 2010 to convert corn and other grains into ethanol as a fuel additive.
Future Fuels bought it in 2013, and VBE began operations there in 2014, after being offered numerous state and local incentives. It ceased operations at the plant less than two years later, just prior to selling it to Omaha, Nebraska-based Green Plains.
Bankruptcy documents show the plant produced $78.56 million in revenue in its fiscal year 2014. That dropped to $35.11 million the following year, during which the plant was operating at a loss of nearly $13 million.
Its downfall, according to court documents, was fueled by declining oil prices and rising corn prices.
“In other words, the ‘perfect storm’ hit in 2015: ethanol prices dropped, and corn prices increased,’” bankruptcy courts state.
The city of Hopewell and the state said last year they were looking into whether some of that money – separate from the incentive money – should be paid back, given the company’s lack of long-term performance.