Earth Biofuels faces bankruptcy

By Jessica Sobolik | October 16, 2007
At press time, a Chapter 7 bankruptcy case against Earth Biofuels was scheduled but postponed, according to the U.S. Bankruptcy Court District of Delaware.

The September court date stemmed from an involuntary Chapter 7 bankruptcy petition filed July 11 by Castlerigg Master Investments Ltd., Radcliffe SPC Ltd., Portside Growth and Opportunity Fund, Cornell Capital Partners LP, and Evolution Master Fund Ltd., according to a U.S. Securities and Exchange Commission 8-K form. The five companies hold $33 million of Earth Biofuels' senior convertible notes, which were issued in July 2006.

The company reported a net loss of $34.6 million in its second quarter fiscal year 2007 earnings statement, released in August. In its 10QSB form, Earth Biofuels said, "We have had net losses from operations each year since inception, and there can be no assurance that we will be profitable in the future. Our financial results depend upon many factors that impact our results of operations including sales prices of natural gas, soy oil and corn biodiesel and ethanol the level and success of production."

After Biodiesel Magazine printed a story in its August 2007 issue regarding a biomass partnership between Earth Biofuels and Revolution Biorefining, the latter company's founder Robert Bickel said the partnership was no longer intact. Earth Biofuels was also working with Liquafaction Corp. to build a 12 MMgy ethanol plant in Moses Lake, Wash., but the two companies signed a mutual release agreement in August, according to Liquafaction Corp. Earth Biofuels acknowledged its attempt to "seek strategic alternatives, including the pursuit of additional financing for strategic acquisitions or a merger with other businesses." However, the company admitted its current financial situation raises "substantial doubt about our ability to continue as [an operating company]."
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