Rice Straw-to-MDF CalPlant Moves Into Chapter 11 Bankruptcy
Before even reaching full production capacity, CalPlant, the world's first facility set to turn post-harvest rice straw waste into Eureka MDF, a medium-density fiberboard with no added formaldehyde, has filed for Chapter 11 bankruptcy in federal court in Delaware.
The $400-million project on 276 acres in Willows, Calif., required decades of engineering work and financing guarantees to move its four-year construction toward commissioning in March 2020, when the COVID-19 pandemic began. But CalPlant entered into a voluntary Plan Support Agreement with its senior bondholders while pursuing a sale of the company, according to an Oct. 5 filing announcement.
The plan calls for a comprehensive financial restructuring of the company's debt and investment resources.
The company will continue to operate without disruption to vendors, customers or employees and has sufficient liquidity to meet financial obligations throughout the restructuring, it said. CalPlant has secured commitments for up to $30.1 million in debtor-in-possession financing from senior bondholders to support the business during the process.
Subject to court approval, CalPlant estimates that "substantially all trade vendors" who will have an ongoing business relationship with the company will be paid for goods and services in the normal course of business without interruption. The initial court filing did not list assets or liabilities.
"The road to fully commissioning our plant has not been smooth," says Jeffrey Wagner, CalPlant's executive chairman, in a statement, citing the pandemic adding to the usual challenges of a first-of-its-kind startup. "We are confident that leveraging the benefits of the Chapter 11 process will allow us to emerge with a stronger financial structure that enables us to continue leading the manufacturing industry with innovative sustainable MDF."
CalPlant did not respond to a request for comment from ENR. The project was selected by an AEC industry panel of judges as ENR California's Project of the Year earlier this summer.
The plant had scaled to produce 600 truckloads of MDF by September 2021. While operational since producing its first board in November 2020, It still has not reached full capacity.
The facility is located in the Sacramento Valley, an area that produces 20% of the country's rice, and sources its rice straw from within an average 25-mile radius.
To assist in plant construction, German engineering firm Siempelkamp guaranteed lenders as to the volume and quality of MDF boards while Columbia Forest Products, an equity partner, guaranteed the sale of boards at a minimum price for 20 years.
With a competitive market for MDF products, boards had been selling as fast as they could be produced, CalPlant founder Jerry Uhland told ENR in September.
CalPlant is being advised in the bankruptcy, restructuring and sale by Morrison & Foerster LLP and Paladin.
