Last week, Pine Lake Corn Processors stopped production at its Steamboat Rock, Iowa plant.
The three-year-old facility produced about 30 million gallons per year, netted roughly $24 million in profits its first two years and employed about 30 people.
The problems at Pine Lake mirrored those of VeraSun Energy, the nation's second-largest ethanol producer, which declared bankruptcy in October.
This week, more details emerged on the pecking order for creditors.
Topping the list of creditors is Wells Fargo Bank which initially claimed debt for bonds totaling $447 million. Recently, Wells Fargo officials announced a deal in which the debt claim would be reduced by half in exchange for maintaining front-of-the-line payback status.
Other groups jockeying for position include AgStar Financial Services, a division of Farm Credit System, which holds $465 million in paper against the ethanol giant. Originally lower on the list because the farm lender was an unsecured creditor, this week a Delaware bankruptcy judge gave the Mankato, Minnesota lender secured status. The move increases AgStar's chances of getting its money back.
Those potentially suffering the most will be the farmers and elevators which supplied the main ingredient in the biofuel brew. Farmers have some special status but remain unsecured creditors. That puts the grain producers further back in line to receive payment.
Recently, the bankruptcy court granted VeraSun the right to accept or reject contracts up to 10-days before delivery. That has farmers wondering if their contracts will be honored, or if they will be released to the whims of the market at the last minute. In what appears to be a nod to this dilemma, VeraSun officials stated they would reject contracts through January for their idled ethanol plants allowing those farmers on-the-hook a chance to remarket their grain.