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Ethanol Producer Magazine is reporting that E3 Biofuels Mead has filed for Chapter 11 Bankruptcy:
A complete list of E3’s finances must be filed by Dec. 17 with a reorganization plan due March 31, 2008.
According to R. J. Wilson, a spokesman for E3 Biofuels, the "mechanical errors" that were reported by the Omaha World Herald and OPIS will be the subject of future litigation. If the mechanical problems had not occurred, E3 Biofuels says it would have been able to continue producing fuel despite the high cost of feedstocks. No further comment was available.
Apparently, this is due to "mechanical problems" that has caused the company to shut down for some time.
This is a bit disturbing. Mechanical failure for any manufacturing facility - let alone a start-up facility - should be expected. This shows three things:
1) This company is inadequately financed. Any start-up company needs enough working capital to weather these types of moments. The nature of this business is even more necessary.
2) There is still a lot to learn about operating this facility that needs to be mitigated. It may not be related to the work done by the plant staff. Given the very rural location, maintenance services and the like are probably hard to come by (and expensive). I worked in plants in the middle of Los Angeles - so I could get same day service. But when I worked in the backwoods of Louisiana, we had to be a little more self-sufficient.
3) The plant's design may have too much risk associated designed into it. If the plant is down for any length of time, the company goes out of business. So the way to mitigate it is to produce several processing channels - instead of one big plant, have many smaller capacity plants that run in parallel. There are drawbacks to each (the downside to multiple plants is that you have many opportunities for failure, high fixed costs, and there's a lot of real estate taken up). (Given that I know next to nothing about this plant, this is all hypothetical).
Whatever the reason, it doesn't sound as though this facility had the resources it needed to weather a storm in its first six months.
