BRADENTON, Fla. – Texas Pellets Inc., and German Pellets Texas LLC have filed petitions for Chapter 11 reorganization, joining a Louisiana affiliate and their German parent company in bankruptcy.
The Texas and Louisiana companies are owned by German Pellets GmbH, which placed its three sites in Germany into bankruptcy on Feb. 10.
Texas Pellets, which has locations in Woodville and Port Arthur, faced creditors' claims and liens that could have compromised operations, according to a Board of Directors' resolution authorizing the bankruptcy filing.
The company has assets between $100 million and $500 million, and liabilities between $100 million and $500 million, according to the petition filed in the U.S. Bankruptcy Court Eastern District of Texas on April 30.
Of the largest unsecured creditors, $2.04 million in trade debt is owed to four companies.
Investors are also owed $184.7 million of unpaid principal on privately placed tax-exempt bonds, plus $4.84 million in accrued interest, court documents said.
The debt was issued by the Sanger Texas Industrial Development Corp. in 2012, and defaulted earlier this year, according to market notices by UMB Bank NA, the bond trustee.
No notice of the bankruptcy filing had been posted on the Municipal Securities Rulemaking Board's EMMA filing system at press time Friday.
U.S. Bankruptcy Judge Bill Parker has given company officials until May 31 to file a statement detailing financial affairs.
Parker also scheduled a hearing for May 25 on a motion by Texas Pellets to obtain $3.4 million in post-petition financing from UMB, court filings said.
UMB also provided a $1.5 million emergency bridge loan prior to the bankruptcy filing because the company experienced "an acute liquidity crisis" that threatened its ability to continue to operate, according to filings.
UMB accelerated the outstanding debt on April 1 due to defaults, according to a material event notice that was the last disclosure posted on EMMA Friday.
In Texas, the lead bankruptcy case number is 16-90126.
Louisiana Pellets filed for reorganization on Feb. 18, less than seven months after its final tranche of $390.2 million of unrated bonds were issued for the company.
UMB also serves as bond trustee and agreed to provide a post-bankruptcy loan to the financially struggling Louisiana companies, according to court documents in that case.
Companies in Texas and Louisiana make wood pellets for heating and other uses that were shipped to Europe as a renewable energy source that is seen as an alternative to coal there.
In Germany, three sites owned by German Pellets GmbH have been sold to preserve the plants and jobs, according to a May 10 article in Biomass Magazine, which cited a statement issued by the firm of an attorney serving as insolvency administrator.
Metropolitan Equity Partners Management LLC, a New York-based financial advisory firm, reportedly will operate a site in Wismar, Germany, formerly the headquarters of the insolvent parent company.
Sites in Ettenheim and Herbrechtingen will be run by German-based J. Rettenmaier & Söhne GmbH + Co KG, a global pulp producer, the magazine said.
