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Bankruptcy Code Prevents VeraSun from Paying

VeraSun Energy Corp. filed for Chapter 11 bankruptcy last Friday and according to a release by the Oil Price Information Service under U.S. Bankruptcy Code is not able to pay for services provided before Oct. 31, 2008 or for corn that was delivered prior to Oct. 11, 2008.

Barry Schaps, senior vice president of sales and logistics for VeraSun, wrote a letter to customers earlier this week explaining the situation.

"If you have not been paid for goods or services provided before these dates, you will be provided in the next few months with a claim form to be completed and filed with the court," the letter says. "Any distribution on the claim will be pursuant to a plan of reorganization that is accepted by creditors and approved by the court or other court orders. We sincerely regret any hardship this may cause."

VeraSun has said it will be able to pay for goods and services delivered after the Oct. 31 bankruptcy filing date. It's unclear whether VeraSun will be able to pay for the goods and services delivered between Oct. 11 and Oct. 31.

A reorganization area has been set up on VeraSun's Web site at www.verasun.com/reorganization.