BioNitrogen in bankruptcy

This week, BioNitrogen filed for Chapter 11 bankruptcy protection.

Hopefully, they’ll reorganize and get some traction on their modular biomass-to-urea plants – certainly, they think their assets (patents) are worth more than their debts ($3.5 million) – but they need to convince investors of that, and of their ability to realize their plans (any plans).

BioNitrogen has made so many announcements over the last few years, it’s been hard to know what’s actually happening.

For example, the proof-of-concept first plant: in January 2013 it was going to be in Hardee County, FL, and Florida allocated $175 million tax-free bonds. Then, in April 2013, Louisiana allocated $1.25 billion bonds for up to five plants in Point Coupee, LA. Nothing happened. Then, in May 2014, they staged a ribbon-cutting ceremony for the “first plant” in Hendry County, FL. Within months, they were developing a new site in Taylor County, FL. Soon, they had to move the Hendry County site, and also move their Taylor County site.

Or the technology: for years, they worked with Casale. Then in 2014, this suddenly changed to Haldor Topsoe, for financing reasons. (Saipem would provide the urea process and the EPC).

The biomass plan: was for the US, but recently they announced new patents for using flared natural gas, and then suggested another business might be to establish biomass plants in South America instead.

I’ve worked in failed start-ups. I know how much easier it is to open a conversation than to close a conversation – but developing one good, thought-through business plan and sticking to it makes launching a technology much easier.

The real concern with BioNitrogen for me came in the revolving door of board members – the latest of whom resigned due to “general disagreement with the manner in which … executive and management decisions were made.”

This may have something to do with the executive, now resigned, who was accused (and cleared) of grand theft, or possibly with the lawsuit from a lender, Annon Consulting, who loaned $845,000 at 30% interest in 2013, and has just won a default judgement against BioNitrogen – which now owes Annon $1.4 million. Unfortunately, BioNitrogen had pledged all its patents as collateral.

The bankruptcy protection should allow BioNitrogen to keep its patents for now – but if they don’t use them to build a plant, they’re no use to anyone.

2 comments

  1. randy seifferlein says:

    I was one of the early investors who believed in the idea that this was a feasible “green” idea that made financial sense also. Now I feel like I was duped. I stupidly invested way too much of my savings and being retired I can’t replace the losses and at the current stock price shares are all but worthless. Are there any future dates coming up for updates on the bankruptcy protection or is that a farce also?

    • Trevor Brown says:

      Hi Randy,

      I’m sorry to hear it.

      While there were certainly farcical elements to what’s happened with BIONX over the last few years, I don’t see any farce going on now – but I have no special knowledge, only impressions gleaned from conversations and what I read in the news. I know they’re working on restructuring but I do not know when – or if – they will succeed. I’m not aware of any established dates or schedule for progress, but I don’t take that to mean they’re not making progress. I think we have to wait and see, though I know that’s cold comfort.

      Best,
      T.

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