Published on December 14th, 2007 | by Max Lindberg
Canton, IL Ethanol Plant Goes Bankrupt
The strange part of this story is, the plant never went into operation. As a matter of fact, it’s still under construction. Farmers who invested in the project have lost their money since the Chapter 11 filing creates a federal injunction prohibiting creditors from taking action against the company, Central Illinois Energy.
It’s taken five years to get the operation to this point, but the main contractor, Lurgi PSI, left the job site and cancelled all contracts on the grounds it wasn’t being paid. The Fulton County Clerk’s Office says more than $30 million in liens have been filed for unpaid invoices by contractors.
Attorney Barry Barash of Galesburg, IL, who is overseeing the bankruptcy, said there were several factors that lead to the action. Re-engineering costs affecting the contractor have been suggested, and the fact that Lurgi was allowed to spend on the project without limit.
The plant is small, with an expected output of 37 million gallons annually, much less than other operations around the state. Barash said the value of product would be around $2 a gallon of ethanol, less than half the ultimate construction cost.
About $6 million worth of corn is stored at the plant, and state law provides payment to farmers for their grain. An estimated 50 people are out of work, and investor-farmers, are counting their losses as management plans to continue construction after reorganization.
According to attorney Barash, it’ll take about $25 million and about a months work to finish the plant, which the remaining management team is attempting to raise. Will it ever go on line? Probably, but Illinois Farm Bureau spokesman John Hawkins is quoted as saying companies are postponing or outright canceling their operations nationwide. He feels it just isn’t time yet to build an ethanol plant.