Dow Jones — With a market abundance of ethanol that has kept the fuel additive’s price low and led Congress to stop encouraging production with a tax credit, Indians-based ethanol producer New Energy Corp. has file for bankruptcy protection to sell its 70-acre plant outside South Bend.
New Energy Executives placed its operations in bankruptcy last week as part of the sale demanded by its top lender, the US Department of Energy, which is owed $33.33 million on a loan that it first extended in 1997. New Energy President Russell Abarr said that the Chapter 11 case, which was filed in US Bankruptcy Court in South Bend, would allow the company to reach operating money that is otherwise restricted by the department’s loan agreements.
Built in 1984, the company called itself the country’s “first large-scale greenfield ethanol plant” and can turn corn into 100 million gallons of ethanol per year, according to court papers.
The company pulled in more tha $280 million in revenue last year, but it lost money because the price of its processed ethanol hasn’t matched what it spent on corn. The current oversupply of ethanol
The volumetric Ethanol Excise Tax Credit, created in 2004, was a 45-cent tax credit that gasoline producers got for every gallon of ethanol they blended into fuel. The Congressional Budget Office estimated that the credit was worth about $5.4 billion in 2010.
Over the last 18 months, the company laid off nearly 100 workers, lowered wages and even supplies customers will ethanol that it didn’t make itself to cut production costs.