November 6, 2008

Corn suppliers may not be affected by Verasun's bankruptcy

VeraSun Energy of Sioux Falls, S.D., filed for Chapter 11 bankruptcy protection last week. VeraSun operates 14 ethanol plants, five of which are in Iowa. They are working to continue operations and pay its corn suppliers.

VeraSun separately announced that it has received $215 million in debtorin-possession financing from AgStar Financial Services of Mankato, Minn., to pay obligations while it is reorganizing under bankruptcy. The company is in negotiations with lenders to secure US$35 million in additional financing.

Northey said his department's Grain Warehouse Bureau is responsible for licensing and inspecting ethanol plants and grain dealers to protect those selling grain to the facilities. It also manages the Iowa Grain Indemnity Fund, which provides financial protection to farmers.

The fund covers farmers with grain on deposit in Iowa-licensed warehouses and grain sold to Iowa-licensed grain dealers. If a state-licensed warehouse fails, the fund will pay farmers 90 percent of a loss on grain up to a maximum of US$150,000 per claimant.

The fund had US$8.2 million on hand at the end of June.