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 Another day, another ethanol plant filing. The latest victim is Cascade Grain Products LLC, a Clatskanie, Ore.-based company that churns out 113 million gallons of ethanol per year, that filed on Wednesday.
But there's something in Cascade's petition that's a little different than what's in the ones filed by its industry rivals.
Many ethanol companies have put themselves up for sale, filed for bankruptcy and blamed both volatile corn prices and weak margins. But there's one other interesting thread that runs through many of them -- disputes with a contractor named Lurgi PSI Inc., which is an affiliate of engineering firm Lurgi GmbH. Indeed, no fewer than three ethanol plant owners to file for Chapter 11 since October -- Hereford Biofuels Holdings LLC, Northeast Biofuels LP and Gateway Ethanol LLC -- have specifically cited disputes with Lurgi in court papers. In each situation, the song remains the same: Lurgi was hired to construct the plant and was then blamed by the company for allegedly missing a number of construction-related deadlines. In Northeast's case, Lurgi has been billed more than $12 million for alleged damages related to the delays in constructing its plant in Fulton, N.Y. The company declared Lurgi in default of the construction agreement, and Lurgi fired back with a $22 million mechanic's lien in an arbitration suit. Gateway's plant in Pratt, Kan., was supposed to be up and running by August 2007, but the company was plagued by numerous construction delays and missed its target. Again, Lurgi PSI was blamed, and Gateway filed an arbitration proceeding against the contractor. Hereford, meanwhile, directly cited Lurgi in a press release announcing its Jan. 23 Chapter 11 filing. Hereford, like the others, noted "continued construction delays." But it also said that it had terminated Lurgi "for cause" and was now working to "correct Lurgi design errors for certain pipes and valves." Even Cascade notes in papers filed with the U.S. Bankruptcy Court for the District of Oregon that a row with its contractor over design and construction deficiencies helped trigger its downfall. But in this case, Lurgi can breathe a sigh of relief. The contractor at issue in Cascade's bankruptcy is JH Kelly Holdings LLC.- Ben Fidler CategoriesComments Deal Video
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You forgot Central Illinois Ethanol (CIE) in Canton, IL. Same Lurgi story. They went through bankruptcy in 2008, the assets bought and have been renamed.