VeraSun rejects corn contracts, raises ire of farmers
November 24, 2008
by Eric Schroeder
SIOUX FALLS, S.D. — VeraSun Energy Corp., which filed for bankruptcy protection in late October, said it has rejected 10 corn contracts totaling approximately $360,000 and warned that more may need to be voided in the future. The announcement prompted a group of 80 Iowa and Minnesota farmers who sold corn on contract to VeraSun to file an objection to force the company to pay the contracts.
"The company has paid or will pay for substantially all pre-petition corn delivered after Oct. 11, 2008, and post-petition corn delivered after Oct. 31, 2008," VeraSun said on Nov. 21. "The U.S. Bankruptcy Code precludes payment for goods delivered before Oct. 11, 2008. This has negatively impacted approximately 10 of VeraSun’s corn producers with balances totaling approximately $360,000 for less than 100,000 bushels. VeraSun has paid more than $9 million in November for corn delivered prior to Oct. 31, 2008."
VeraSun said it may need to reject some corn contracts for delivery through Dec. 31, 2008, at its Janesville and Welcome, Minn., facilities due to the delayed startups. In addition, other contracts may need to be rejected or renegotiated as the company works through them on an individual basis, and VeraSun said it has temporarily ceased receiving corn and processing at certain facilities while it seeks to secure additional financing.
"VeraSun Energy values the relationships with our corn suppliers and recognizes their vital role to our business," the company said. "We continue to work with suppliers while we pursue long-term financing."
A hearing will be held at 10 a.m. Dec. 2 in Delaware to review VeraSun’s request and any objections filed.
Headquartered in Sioux Falls, VeraSun is a producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states. VeraSun Energy currently has an annual production capacity potential of approximately 1.64 billion gallons of ethanol and 5 million tons of distillers grains.