BRADENTON, Fla. - After amassing nearly $2 billion in bonding authority from Louisiana and Florida, BioNitrogen Holdings Corp. filed for Chapter 11 bankruptcy on Nov. 3.
Although the bonds were never issued, the company's fate remains in limbo along with a trail of announced projects promising green economic development prospects in job-starved rural areas of both states.
In Louisiana, the startup company has already lost its initial $300 million of private activity bond authority from the $1.25 billion it received from the state's volume cap, and the conduit issuer of the debt considers the development of five promised plants that were to have employed a patented technology to turn biomass into fertilizer to be dead.
In Florida's panhandle region, BioNitrogen officials dangled about 75 new full-time jobs and a $300 million capital investment in front of the small city of Perry in Taylor County to elicit a $5 million loan guarantee, most of which has been spent.
"I have been advised not to comment because of pending litigation," Perry city manager Bob Brown said after being asked by The Bond Buyer about BioNitrogen's bankruptcy filing.
Brown did say that most of a bank loan guaranteed by the city of 7,000 residents had been spent, including $1.3 million toward the purchase of land for the company's plant.
The title to the land is in the city's name, he said.
However, the land is collateral for the loan that was to be repaid through the sale of $300 million in tax-exempt private activity bonds the Taylor County Industrial Development Authority had agreed to issue after receiving a state volume cap allocation last year.
This week, attorneys filed documents requesting to represent Perry in BioNitrogen's bankruptcy case, including any potential adversary proceedings.
The city's law firm, Rumberger, Kirk & Caldwell PA, also represented the city of Prichard, Ala., in its 2009 Chapter 9 bankruptcy case. Prichard's plan of adjustment was confirmed in July 2014, according to court records.
In rural south Florida, BioNitrogen received tax abatements from Hendry County and new market tax credits from the state in return for developing a plant in Clewiston's industrial park that so far has not materialized.
To finance the plant, the Hendry County Industrial Development Authority agreed to issue $300 million of PABs. To date, the bonds have not been issued. The state volume cap allocation - granted in 2013 – must be used within three years to comply with Internal Revenue Service regulations.
The Hendry County IDA plans to hold a meeting in December to review its agreement with BioNitrogen, said Electa Waddell, the county's strategic initiatives coordinator.
BioNitrogen spokesperson Lilian Ruiz did not respond to requests for comment.
The company's lead bankruptcy attorney, Jacqueline Calderin at Ehrenstein Charbonneau Calderin, did not respond to an email.
It is unclear where the projects stand because of the potentially lengthy and costly bankruptcy process as well as a review of company financials filed by BioNitrogen, whose stock is traded on the Pink Sheets under the symbol BION.
Unaudited financial statements as of June 30, 2015 showed the company had total assets of $10.8 million, total liabilities and long-term debt of $11.68 million, and $3.8 million in accounts payable.
The financial report, posted on the OTC Markets website Aug. 31, included a "going concern" statement casting material uncertainties about the company's future.
"The ability of the company to obtain necessary financing to build its manufacturing facilities and fund ongoing operating expenses is uncertain," it said, outlining net losses of $1.15 million in fiscal 2015 and $1.75 million in fiscal 2014.
Another uncertainty is a default judgment in favor of Annon Consulting Inc., a Canadian company that reportedly lent BioNitrogen $845,000 at 30% interest in December 2013.
The unliquidated, disputed Annon judgment was listed as totaling $1.4 million on BioNitrogen's Nov. 3 bankruptcy petition.
"We seek to emerge from this process as quickly as possible in a stronger position as a company," BioNitrogen chief executive officer Carlos Contreras said in a Nov. 4 press release announcing the bankruptcy filing.
The release also announced the resignations of three people from the company's board of directors.
Earlier this year, the firm's president and chief financial officer resigned.
As recently as June, BioNitrogen reported in pink sheet disclosures that it received authorization to finance the first of five planned plants in Pointe Coupee Parish, La., with $300 million in tax-exempt bonds.
However, its subsidiary company in the state - Bionitrogen Louisiana Holdings LLC – is not in good standing and has not filed an annual report since January 2014, Division of Corporations records show.
Additionally, the company lost its volume cap allocation for the bonds, which was returned to the state unused in early 2014, according to an executive order issued by Gov. Bobby Jindal.
The company potentially faces additional expenses and reviews if it attempts to revive its projects using the Louisiana Local Government Environmental Facilities and Community Development Authority, which previously agreed to serve as the conduit issuer of the bonds.
The fact that BioNitrogen had filed for bankruptcy was unknown to LCDA's executive director, Ty Carlos.
"Obviously this was news to me," he said in an interview Tuesday.
Carlos said the company received preliminary authorization to issue the bonds but never returned as required by the agency for final approval.
"We consider it a dead deal," he said. "If they were to come back to us the whole process would start over."
BioNitrogen's bankruptcy would also play a critical role in determining whether the LCDA would agree to consider serving as the conduit issuer again.
"Whether they come out of Chapter 11 is ultimately a decision they have to make," he said, referring to the prospect of reorganizing under the bankruptcy code. "But I can tell you the history will certainly play a role if they come back to us."
While no bonds were issued for BioNitrogen projects in Louisiana that could jeopardize investors in a bankruptcy, Carlos said the harm to the state so far has been in dashing the "hopes and dreams" of the parishes that stood to benefit from the projects.
