USDA biorefinery loan guarantee program update prohibits debt writedown
In Washington, an updated federal rule took effect July 9 for the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Program, also known as the Section 9003 Program. The program provides loan guarantees of up to $250 million to assist with the development, construction and retrofitting of facilities that produce advanced biofuels, renewable chemicals and biobased products, the U.S. Department of Agriculture announced.
The rule revises program servicing requirements by prohibiting debt write-downs for an existing borrower or guarantor when the same owners or principals retain control of the business and decision-making authority. The rule allows an exception when directed or ordered under the Bankruptcy Code.
The rule also prohibits borrowers, guarantors and related parties from remaining involved in a project any time the agency takes a loss. The restriction applies to related parties when the borrower or guarantor does not have an arm’s-length transaction relationship with them.
The program covers facilities using new and emerging technologies to produce advanced biofuels, renewable chemicals and biobased products. The rule states that the revisions are intended to strengthen oversight and management of Section 9003 loan guarantee portfolios.
Category: Policy
