Future of South Bend's ethanol plant up to federal judge

The complicated issue began in November when the ethanol plant shut down, laid off a lot of its workers and filed for bankruptcy. Last month two liquidators bought New Energy at an auction but a Texas company is claiming that sale was illegal and is asking a federal judge to intervene. 

“It looks just like another delay,” said New Energy maintenance superintendent Michael Groenke as he left Wednesday morning’s bankruptcy hearing. “Just so many unanswered questions.  We really don’t know what it’s going to do for us.”

Groenke and the roughly 25 other employees he says are left at New Energy are dealing with more questions after more than three months of waiting. 

“It would be a tragedy to see a business of that caliber scrapped out. Your community would lose jobs, you’d lose millions and billions of dollars of impact,” explained Robert Salazar, the President and CEO for Texas company Natural Chem. 

Salazar wants to buy New Energy but said the auction happened so quickly after the plant filed Chapter 11 Bankruptcy, he didn’t have time to take all the steps needed to participate in the auction.

Two liquidators came in with the highest bid at that Jan. 31 auction, but Salazar is trying to block the sale in federal court.

“In our view the auction was tainted by bidder collusion,” he explained.  “Two bidders said in the middle of the auction, ‘We're going to bid together' and they bid together so they wouldn't have to bid against each other.  Well that's illegal in our view under the bankruptcy code.”

The bankruptcy judge ruled Tuesday that sale was legal but Salazar is appealing in U.S. District Court.

He said Natural Chem has $25 million to operate the former New Energy plant and eventually produce five or six products from corn – not just ethanol and livestock feed.

Salazar isn’t the only interested party.  A group of local investors is also interested in buying the plant.

“It’s hard to plan on anything for sure,” said Rudy Yakym, a South Bend entrepreneur who said he and three others also were not given enough time to gather the necessary resources to buy the plant before it hit the auction block.

“The question is – who’s going to buy it? Is the liquidator going to [sell it] to individuals who are going to operate it or are they going to sell it to somebody who’s going to scrap it out?” he asked.

The liquidators' attorneys told the judge they plan to close on the sale in the next week or so and indicated they’ve been in contact with someone who is interested in operating the plant.  But if Natural Chem wins its appeal, the federal judge could delay the sale.

It’ll be up to a second federal judge to decide whether the first sale was legal and if a second auction needs to happen.

But Groenke worries it could be too late.

“Time is running out,” he said.