Panda Ethanol subsidiary files Chapter 11; will put Texas ethanol plant up for sale following financing collapse

In Texas, Panda Ethanol’s Hereford Biofuels subsidiary filed for Chapter 11 bankruptcy, saying that the refusal by one of its lenders to fund loans had left the plant no choice but to pursue a Section 363 bankruptcy sale of its Hereford plant.

The plant is in the final stage of construction, which was delayed after a dispute between Lurgi, the primary contractor, and Panda, which resulted in the replacement of Lurgi. The company said that it is negotiating with a buyer for the plant, but added that under Section 363, other companies will be able to participate in a court-supervised biding process; the company said it expects to complete a sale within 90 days.

Societe General bank recently informed Panda that one of the banks in its funding syndicate would not fund further capital requests for the project. Panda was unsuccessful in seeking debtor-in-possession financing.

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