Former Imperium Renewables commodities trader sues for $12 million over back pay
May 30, 2008
In Washington state, a former Imperium Renewable employee has sued the company for as much as $12 million in back payments, punitive damages and attorney’s fees. The suit alleges that Kenneth Orr was dismissed after earning more than $58 million for the company trading commodities, in order to avoid an expensive series of bonus payments on the proceeds from trading. Imperium, in its response, noted that it experienced cash difficulties in 2007, and Orr was laid off after the company concluded it needed to free up capital by ceasing commodities trading activity.
Imperium Renewables has slashed its workforce early this year in a cost-cutting move. The biodiesel maker did not make more details available about job losses, but said that operations at its 100 Mgy plant in Grays Harbor were not affected.
Just before Christmas, Martin Tobias resigned as CEO of Imperium, which closed a $113 million venture capital round in 2007 as well as securing a $100 million bank debt financing, but had not closed a planned $345 million IPO. Imperium is backed by Paul Allen, co-founder of Microsoft, where Tobias formerly was employed before joining Imperium. Imperium founder John Plaza was named interim CEO and director Nancy Floyd was named chairman.
Imperium Renewables canceled its planned IPO due to “unfavorable market conditions.” The company had planned a $345 million IPO in May that would have financed the construction of three new biodiesel plants, including a $90 million project with Hawaiian Electric.
Imperium had been instrumental not only in developing its own strategy, but had provided initial funding for Propel Biofuels in the form of a loan. Propel announced a goal in April of installing its biodiesel fuel equipment at 20 stations in Washington, Oregon and California. Currently, the company has eight sites in Washington state in the permitting stage.
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[...] January was a tough time for the Paul Allen-back company. Within a span of three weeks, Imperium stepped back from a planned $345 million IPO, kicked out CEO Martin Tobias, and laid off most of its corporate work force. Also canned were a three plant expansion plan, of which included a signed $90 million contract with Hawaiian Electric. Imperium has responded to the lawsuit by saying Orr was fired because the company experienced a cash shortage at the end of 2007 (despite raising $213 million in VC and debt financing that year), and his operations were closed down to free up some extra capital. [...]