VBE began operations at the ethanol production facility in 2014, but sold to a Nebraska firm less than two years later for $18 million. (Map via Google)
As it looks to wind down its bankruptcy liquidation, the former owner of a local ethanol plant is going after the taxman.
Vireol Bio Energy, which operated the 55-acre ethanol production facility at 701 S. Sixth Ave. in Hopewell until a sale and subsequent bankruptcy last year, filed suit last week against the Virginia Department of Taxation claiming the state agency wrongfully charged its employer withholding tax for the first quarter even though the company was a bankrupt shell with no employees at the time.
The company claims the state, butting up against federal bankruptcy rules, then collected on that tax by keeping a portion of a $778,000 state grant that was owed to VBE. That grant money was earned through a state biofuel incentive program and was the largest single asset in the company’s bankruptcy estate, which expects to have just enough money to pay its creditors $0.29 for every $1 they’re owed by VBE.
VBE claims in the suit that the Department of Taxation took nearly $63,000 out of its pot of grant money without notice and has asked the federal bankruptcy court to order the state to return the funds.
Click image to see the full PDF.
VBE claims it fired all its employees upon ceasing operations of the plant last year.
The company argues that the state had no right to take any of the grant money because it was earned prior to its bankruptcy filing, the alleged tax obligation was incurred after the bankruptcy filing, and federal bankruptcy code would require the state to gain permission from federal court to seize those funds.
It also claims that charging employer withholding tax to a company that has no employees is “without basis in fact.”
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.
VBE had its Chapter 11 liquidation plan approved by federal bankruptcy court earlier this year. The plan hinges on the estate’s ability to drum up $1.7 million in assets to potentially be paid out on around $4.98 million in debt claims.
VBE began operations at the Hopewell ethanol plant in 2014, after being offered state and local incentives. It ceased operations at the plant less than two years later, citing instability in the energy market, just prior to it being sold by an affiliate to Omaha, Nebraska-based Green Plains for $18 million.
VBE is represented in its bankruptcy by DurretteCrump attorneys Bruce Arkema and Kevin Funk. Arkema did not return a call by press time.
The Department of Taxation said it does not comment on active litigation.
VBE began operations at the ethanol production facility in 2014, but sold to a Nebraska firm less than two years later for $18 million. (Map via Google)
As it looks to wind down its bankruptcy liquidation, the former owner of a local ethanol plant is going after the taxman.
Vireol Bio Energy, which operated the 55-acre ethanol production facility at 701 S. Sixth Ave. in Hopewell until a sale and subsequent bankruptcy last year, filed suit last week against the Virginia Department of Taxation claiming the state agency wrongfully charged its employer withholding tax for the first quarter even though the company was a bankrupt shell with no employees at the time.
The company claims the state, butting up against federal bankruptcy rules, then collected on that tax by keeping a portion of a $778,000 state grant that was owed to VBE. That grant money was earned through a state biofuel incentive program and was the largest single asset in the company’s bankruptcy estate, which expects to have just enough money to pay its creditors $0.29 for every $1 they’re owed by VBE.
VBE claims in the suit that the Department of Taxation took nearly $63,000 out of its pot of grant money without notice and has asked the federal bankruptcy court to order the state to return the funds.
Click image to see the full PDF.
VBE claims it fired all its employees upon ceasing operations of the plant last year.
The company argues that the state had no right to take any of the grant money because it was earned prior to its bankruptcy filing, the alleged tax obligation was incurred after the bankruptcy filing, and federal bankruptcy code would require the state to gain permission from federal court to seize those funds.
It also claims that charging employer withholding tax to a company that has no employees is “without basis in fact.”
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.
VBE had its Chapter 11 liquidation plan approved by federal bankruptcy court earlier this year. The plan hinges on the estate’s ability to drum up $1.7 million in assets to potentially be paid out on around $4.98 million in debt claims.
VBE began operations at the Hopewell ethanol plant in 2014, after being offered state and local incentives. It ceased operations at the plant less than two years later, citing instability in the energy market, just prior to it being sold by an affiliate to Omaha, Nebraska-based Green Plains for $18 million.
VBE is represented in its bankruptcy by DurretteCrump attorneys Bruce Arkema and Kevin Funk. Arkema did not return a call by press time.
The Department of Taxation said it does not comment on active litigation.
What’s planned for the site?
Anyone know?
America faces a glut of ethanol and fracking has created a glut of oil, so there is little future for this high price feedstock plant at present.
I meant, what are they going to do with the site?