Insolvent biodiesel maker ARFuels enters voluntary administration
January 21, 2016
BY Ron Kotrba
On Jan. 21, biodiesel producer Australian Renewable Fuels Ltd. announced that its board of directors has regrettably placed the company into a state of voluntary administration, which the firm describes as “a form of insolvency arrangement that creates an opportunity for flexible and innovative approaches to bring about a better outcome for stakeholders than may otherwise occur in liquidation.”
The company cites rapidly declining oil prices, the breakdown in correlation between crude oil and feedstock pricing, and “continued and destabilizing uncertainty of the [Australian] government’s policy in regard to biodiesel over recent years…” as reasons for the decision.
“The board and management have rigorously examined options to protect the business and provide a basis for a restart of operations if or when satisfactory gross margins return,” ARFuels stated. “These included seeking price increase from our customers, pursuing more profitable export sales opportunities to the U.S. along with idling the production facilities and reducing all corporate activities. Those initiatives would have required the support of the major lenders to allow the company to retain funds and pay all outstanding trade creditors and employee entitlements. To that end, a number of proposals were submitted to the company’s debt providers. Unfortunately, the debt providers have considered their position and have rejected these proposals leaving the board with no alternative but to appoint a voluntary administrator.”
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David McEvoy and Nick Martin of PPB Advisory have been appointed to act as voluntary administrators. ARFuels says its board and senior management intend to work with PPB Advisory to explore all options to maximize the value for all of the company’s stakeholders.
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