Georgia ethanol plant emerges from bankruptcy
A reorganization plan allowing Southwest Georgia Ethanol LLC to emerge from Chapter 11 bankruptcy was approved in U.S. Bankruptcy Court, Middle District of Georgia, Albany Division. The approved reorganization plan was filed in court Oct. 4 and became effective Dec. 31. “SWGE will have the benefit of a strong balance sheet, allowing SWGE to continue to be an economic engine for Southwest Georgia, contributing to local tax coffers, and generating revenue for area businesses,” said Murray Campbell, president and one of the founders of the company.
The 100 MMgy plant, which is located in Camilla, Ga., operated as a debtor in possession at full production levels during the bankruptcy. All members of the management team, including Campbell, and all 64 plant employees will retain their positions. All members of the board of managers, as per the agreement, have resigned and a new board has been established. James Continenza, who has experience in the ethanol industry and as a senior executive working to turn around underperforming businesses, will serve as chairman of the board.
The ethanol plant, which was a wholly owned subsidiary of First United Ethanol LLC, filed for bankruptcy on Feb. 2. FUEL did not file for bankruptcy and, as part of the restructuring, is now a shareholder in the ethanol plant, according to Alicia Shirah, director of communications.
SWGE said in court documents that it filed for bankruptcy due to liquidity constraints that resulted from operational problems that have now been largely resolved. It also pointed to financial difficulties caused by increased corn prices and delivery delays. Corn is purchased from local corn producers when it is competitively priced but the majority is delivered via rail car from the Midwest, the company said, adding that rail delays caused problems in 2010.
The reorganization plan called for SWGE to pay $150,000 to the litigation trustee, an amount that represents a portion of the general unsecured creditors’ fund. Additionally, FUEL agreed to pay $35,000. Finally, settlements were made with Dollar Farm Products Inc. and Knight Farms. Dollar Farm Products will pay $510,000 in three installments as well as each member of the Dollar Family Group offering to sell any harvested corn to the ethanol plant at the current market price for a period of three years. Knight Farms will pay $10,000 to the litigation trustee and will execute contracts to sell 40,000 bushels of corn to the ethanol plant at a fixed price of $6.24, with delivery in August and September.
The ethanol plant has roots that go back to 2005, when the Mitchell County Research Group LLC formed and funded a feasibility study. Several months later a board was formed and the name was changed to First United Ethanol LLC. Construction began in the spring of 2007 with costs projected to be $185 million to build the plant. An equity offering in 2007 bought in $74 million from more than 800 investors.
Georgia has two existing ethanol plants, both of which have hit rough spots. The former Range Fuels Inc. cellulosic biofuels plant in Soperton, Ga., was purchased by LanzaTech Jan. 3 at a foreclosure sale.