Ethanol plant may end up on auction block to pay tax bill

By Holly Jessen | November 21, 2012

The city of Hopewell, Va., is moving forward with plans to auction off Appomattox Bio Energy LLC in an effort to recoup more than $1.6 million in lost tax revenue. The 65 MMgy barley-to-ethanol plant built by Osage Bio Energy LLC was mechanically complete in August 2011 but never reached full production.

If all goes as planned, the tax sale will happen in early 2013, said Stefan Calos, an attorney with Sands Anderson PC, which is representing Hopewell. “There are certain things we have to comply with in Virginia code and we’re in the process of doing those preliminary things,” he said. “We’re still very early in the process.”

The first step is to identify all interested parties. “We need to determine exactly who the stakeholders are, so everyone who is entitled to notice of the sale is given notice of the sale and so that everyone who must be served with suit papers is served with suit papers,” he said. Once that is completed, if the taxes have not yet been paid, a lawsuit will be filed, eventually leading to court orders to set an auction date.

The money from auctioning off the $200 million facility will first go to the city, to pay off the unpaid tax revenue and other associated costs. If there is any money left over after that, the remainder will go to any other lienholders, Calos said, adding that since the title work is not yet complete, that’s an unknown factor. Any remaining money would be paid to the new owners of the property.

Osage put out a press release in May 2011, stating the plant wouldn’t reach full production and was being sold due to unfavorable market conditions. It did not reference a September 2010 explosion at the plant or that repairs to the plant’s regenerative thermal oxidizer took longer than expected. The company did say it would immediately lay off workers effective May 25, but that it would retain “a core team of employees” to maintain the plant and facilitate the sale.