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Judge Mary Ann Whipple, of the U.S. Bankruptcy Court for the Northern District of Ohio, delayed approving the sale on the bankrupt ethanol plant Wednesday while attorneys for the plant and its creditors draft a final sale order. But barring new complications, she is expected to grant a sale to Paladin Capital Group when the hearing convenes next week.
The Washington, D.C.-based capital firm has offered to buy the Lima plant for $5.75 million in cash and a promise to pay a little more than $15 million more in the future. The deal follows months of bankruptcy proceedings and three failed auction efforts.
Tim Hurley, attorney for GO Ethanol, acknowledged it seems like a slight bid, but it offers the strongest chance the plant will be back in operation.
"The result of this sale is, we believe, an operational plant. The buyer is an entity that knows this facility well, which lost a lot of its own money in the process, but has the wherewithal to put substantial money in this plant," Hurley said.
Paladin Capital is the same company that put together $145 million in debt and equity financing to launch construction of the plant just two years ago. The company's portfolio also includes a Southern California biodiesel plant and investments in Brazilian ethanol projects as well as the Lima-based manufacturer Accubuilt Inc.
Calls and e-mails to Paladin Managing Director Mark Maloney were not returned, but Hurley said Wednesday the company plans to pay for the estimated $10 million to $25 million in repairs needed to get the facility running correctly.
Hurley also said there's a chance that former employees could be brought back by Paladin to help operate the plant. That could include the same management group that led the plant through bankruptcy. But hiring the old team is not part of the sale deal.
"The answer to that question is there's no such arrangement at this point. Will it happen? I would say it's quite possible, but at this point we don't know that," Hurley said.
Wednesday's hearing stretched on for nearly two hours as Judge Whipple questioned attorneys on details of the proposed sale. She questioned the "insider" post Paladin held in the process and whether the $15 million promissory note would be paid.
"I'm a little interested in what makes anybody think this is going to be paid. I've never seen one of these paid," Whipple said.
Paladin's role as investor and the people who talked lead creditor SunTrust into investing more than $80 million into the failed project actually worked against them in the bidding process, Hurley said.
"That there is a buyer who put $80 [million] to $90 million in and now walks away with a fraction of that and now they're going to sell it to the original owner for a fraction of that, as you can imagine, that caused some stress. It was not an easy pill to swallow," Hurley said.
The sale hearing is set to reconvene at 9:30 a.m. Wednesday.
You can comment on this story at www.limaohio.com.
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