Bankruptcy
As of October 31, 2008, VeraSun and twenty-four of its subsidiaries have filed for Chapter 11 bankruptcy protection to enhance liquidity while it reorganizes. The Sioux Falls-based company says the move was voluntary in order to maintain business as usual. South Dakota Senator John Thune says he is hopeful VeraSun Energy will emerge a stronger company after the chapter 11 filing.
VeraSun's financial difficulties were the result of the company buying corn contracts at a high price. When corn prices dropped by about half before delivery, VeraSun lost hundreds of millions of dollars. Grain contracts are used by grain purchasers as hedge against possible price increases and by farmers as a hedge against price decreases. In this case the price of corn dropped dramatically and VeraSun was left paying much more than it would have had it not bought the futures.
VeraSun ended up selling seven of the plants to Valero Energy Corporation, and the rest to other companies in 2009.
Read more about this topic: Vera Sun Energy
Famous quotes containing the word bankruptcy:
“Disappointment is a sort of bankruptcy—the bankruptcy of a soul that expends too much in hope and expectation.”
—Eric Hoffer (1902–1983)
“You must get your living by loving. But as it is said of the merchants that ninety-seven in a hundred fail, so the life of men generally, tried by this standard, is a failure, and bankruptcy may be surely prophesied.”
—Henry David Thoreau (1817–1862)
“The heritage of the American Revolution is forgotten, and the American government, for better and for worse, has entered into the heritage of Europe as though it were its patrimony—unaware, alas, of the fact that Europe’s declining power was preceded and accompanied by political bankruptcy, the bankruptcy of the nation-state and its concept of sovereignty.”
—Hannah Arendt (1906–1975)