Iowa's largest ethanol producer, Hawkeye Energy, announced that a proposed plan to reorganize one of its subsidiaries, Hawkeye Renewables, LLC, has been overwhelmingly accepted by its first lien lenders. As part of the plan the company has filed for reorganization under chapter 11 of the U.S. Bankruptcy Code in Delaware. The bankruptcy affects plants in Iowa Falls and Fairbank, Iowa. The company faces debts approaching $1 billion.
The implementation of the plan, which has been accepted by first lien lenders but not by second lien lenders, is subject to court approval. The two plants are continuing operations including buying corn. Renewables fully expects all corn suppliers will be paid in full under normal terms for current and future contracts and that both plants will continue to meet all sales commitments to their ethanol and distillers grain customers.
Hawkeye Energy Holdings CEO Bruce Rastetter says while the market for ethanol has stabilized and financial performance has improved in recent months, it nevertheless became clear that a restructuring of the Renewables unit's balance sheet would be necessary for the company to compete effectively in the future.
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