Chapter 11 bankruptcy filing tars ethanol venture
The Pacific Ethanol subsidiaries that own corn-to-fuel plants have filed for protection from creditors under Chapter 11 of the federal bankruptcy code, the latest setback for this once-booming alternative-fuel niche.
Pacific will continue managing the plants, and its subsidiaries, Kinergy Marketing and Pacific Ag Products, are expected to continue their marketing and selling operations.
“We have worked well with our creditors to develop a plan that we believe allows us to continue operations and meet our commitments to our customers and vendors," Neil Koehler, Pacific Ethanol’s chief executive and president, said in a statement. "We are unwavering in our vision of being a leading producer and marketer of low carbon fuels in the Western United States. While the market environment for the ethanol industry has been challenging over the last several quarters, we remain confident that a restructured company will grow and prosper as the demand for low carbon fuels increases.”
Fluctuating corn and gasoline prices and a host of other factors have beset the alternative fuel industry that has bet big on corn. Pacific was among the producers that have lobbied against California's landmark fuel standard that would rate all fuels (fossil or otherwise) based on their direct and indirect carbon footprint. For corn ethanol, that means not only the fossil-fuel-based fertilizer put on the field, but also the land clearing that goes on before planting.
There has been a yard sale of troubled ethanol plants lately, so Pacific is hardly alone. And there was no consolation in the news that ethanol prices rose Monday on fears of curtailed oil shipments from the troubled Niger River Delta and news of a refinery fire in Pennsylvania.
-- Geoffrey Mohan
Photo: Pacific Chief Executive Neil Koehler outside the company's Madera, Calif., plant, since idled. Credit: Robert Durell / Los Angeles Times