Western Biomass up for sale; Blue Sugars files bankruptcy

By Susanne Retka Schill | May 16, 2013

Just months after receiving the first cellulosic renewable identification numbers for a shipment of cellulosic ethanol to its Brazil partner Petrobras, Western Biomass Energy LLC filed for bankruptcy and is now up for sale with bidding closing May 20. Parent company Blue Sugars Corp. has followed suit, filing a voluntary Chapter 7 petition in Nevada bankruptcy court on May 10.

Western Biomass Energy filed for Chapter 11 bankruptcy on Oct. 31,  but attempts to develop a reorganization plan were unsuccessful.  The proceedings were converted to a Chapter 7 and on May 2, the U.S. bankruptcy court for the district of Wyoming approved the auction sale of the plant, free and clear of liens.

Great American Group is handling the private treaty sale of the plant and equipment in Upton, Wyo. The bidding opened May 6 and closes May 20 at 5 p.m. PDT.

Great American described the plant as allowing for the processing of various types of biomass feedstock at a capacity of 1 to 2 dry tons per hour. In addition to biomass storage, handling and preparation capabilities, the plant has capacity for on-site enzyme production and yeast propagation, low-acid impregnation, thermal-mechanical pretreatment, multiple-stage hydrolysis, fermentation, distillation and dehydration. “Automation and instrumentation all meet the high requirements of Blue Sugar’s petrochemical partners,” the description of the sale on Great American’s website reads. “The plant allows for remote live-stream data sharing with the development partners.”  

The Upton, Wyo., demonstration facility was the nation’s first demonstration-scale cellulosic ethanol facility when it was brought online in January 2008 by KL Process Design Group. Brazil’s Petrobras S.A. took interest in the company’s work and entered into a development agreement in 2010. KL Energy Corp. revamped the demonstration plant for sugarcane bagasse and refined the process, producing 20,000 gallons of cellulosic ethanol in 2011 that was shipped to Brazil. The announcement of the shipment came with the announcement of a name change of KL Energy to Blue Sugars Corp., plus the announcement of an extension of the development agreement with Petrobras and the launch of engineering on a commercial-scale facility.

In court documents, parent company Blue Sugars Corp. was by far the largest creditor of Western Biomass Energy at $30 million. The company owed a total of $31.5 million to secured creditors and $3.84 million to unsecured creditors. Court documents indicate there was a motion in February made by the unsecured creditors’ committee to convert the proceedings to Chapter 7.

What seemed to be a promising and successful partnership for Blue Sugars with Petrobras has taken an unexpected turn. Petrobras figures as the company’s biggest trade debtor in the Blue Sugar Chapter 7 filings, according to industry sources, who also said litigation over the debt and an unspecified amount in damages is imminent.  Blue Sugars reportedly recently licensed its technology to British Petroleum and another U.S. company.