On October 23, 2018, US-based cellulosic ethanol technology developers Alliance BioEnergy Plus, Inc, announced that it has filed for protection under Chapter 11 of the Federal Bankruptcy Act.
According to a statement, the company’s board of directors and recently-appointed management have “worked diligently” for over four months since assuming responsibility from former management in an effort to bring the company to viability.
In conjunction with newly hired President of Alliance Bio-Products, Patrick Simms, at the end of September we completed our due diligence of the Company’s previously proposed acquisition of the ethanol plant we were seeking to acquire. Our analysis revealed that, based on current corn and ethanol prices, the plant would have been too great a cash drain prior to the time we would have been able to install our CTS 2.0 technology, thereby modifying the facility from corn to a cellulosic ethanol plant. The combined cost of the acquisition and bridge financing, together with the uncertainty of the time-frame required to reach profitability, made it literally impossible to fund the acquisition. On that basis, we determined that the project is not economically feasible and we have decided to abandon it, the company said.
Proprietary mechanical-chemical CTS technology
In late 2017 and early 2018 Alliance developed a new and improved technology system that its says converts any cellulosic material – grasses, wood, paper, farm waste, yard waste, forestry products, nutshells, and the cellulosic portion of municipal solid waste – into biofuels and bioplastics that is far more efficient in its use of energy, its conversion speed, and its conversion efficiency, than the first generation process that Alliance exclusively licensed from the University of Central Florida.
Called the “Cellulose-to-Sugar” (CTS 2.0), the cellulose is converted into sugar and lignin in a mechanical-chemical process using an inexpensive catalyst. The sugar is further converted into ethanol and other biofuels; the lignin is further converted into bioplastics.
Alliance says that this new technology made it worthwhile to financially restructure the company through Chapter 11 as it expects to be able to produce cellulosic ethanol using CTS 2.0 at a significantly lower cost than any other cellulosic process and even at a lower cost than ethanol from corn given that cellulosic feedstock is much less expensive than corn.
In addition, Alliance is actively exploring other “green” or renewable technologies that are beyond the development stage for possible acquisition or strategic partnerships.
Chapter 11 to restructure and complete CTS 2.0 commercialization
The board has now determined to seek sufficient financing directly into the parent Company (Alliance BioEnergy Plus, Inc.) to complete the engineering necessary to commercialize its CTS 2.0 technology.
In order to accomplish this, the board has determined that the company has no alternative other than to seek protection under a Chapter 11 Bankruptcy filing in order to deal with its current debt and to stay and eliminate certain pending and threatened lawsuits against the company.
Anthony Santelli has been appointed Chief Operating Officer for the duration of Chapter 11 proceedings and Patrick Simms has been appointed Vice President of Manufacturing of Alliance BioEnergy Plus, Inc, to guide the company through the process of dealing with litigation, obtaining necessary capital and developing a viable exit strategy.
We believe that filing for Chapter 11 buys us the time to seek the necessary capital to bring the Company’s CTS 2.0 technology to commercialization. We are in contact with various parties we believe are capable of investing the necessary sums. In the meantime, we have hired experienced attorneys to aggressively contest the various lawsuits filed against us in order to eliminate disputed debts and claims and make the Company more attractive to investors. We believe that the Company has available defenses to each of these cases and claims and that we will prevail in each of them. The Company’s board and management are personally committed to doing everything possible to minimize dilution to shareholders while retaining our valuable intellectual property rights, said Ben Slager, CEO, Alliance BioEnergy Plus, Inc.