A 276-acre manufacturing plant in Willows has been put into voluntary Chapter 11 bankruptcy reorganization while its bondholders invest more money into an attempt to sell the pioneering operation, which is the first in the world to use waste rice straw to make medium-density fiberboard as a green construction material.
The CalPlant operation is the world’s first to convert rice straw — a waste product of rice farming — into environmentally friendly medium-density fiberboard. The plant represents an investment of about $500 million over decades.
"The road to fully commissioning our plant has not been smooth. We started commissioning our facility in early March 2020. Then the pandemic hit. Suddenly, the usual challenges and delays associated with a startup were compounded with navigating a startup using first-of-its-kind technology during a global pandemic,” said Jeffrey Wagner, CalPlant's executive chairman, in a news release. “Still, our team remained dedicated, resilient, and ready to pivot to continue our momentum towards completion. Today's actions are a testament to our team's relentless determination to continue pressing forward despite the numerous road bumps we have hit along the way."
CalPlant said it will continue to operate without disruption to its vendors, customers or employees, and will have sufficient liquidity to meet its financial obligations throughout the restructuring.
"We are confident that leveraging the benefits of the Chapter 11 process will allow us to emerge with a stronger financial structure that enables us to continue leading the manufacturing industry with innovative sustainable (medium-density fiberboard)," Wagner said. "We expect to move efficiently and successfully through this voluntary restructuring and sale process."
CalPlant intends to conduct a court-supervised sale process and complete the sale through a Chapter 11 plan, it said in a release. The company didn’t respond to an email from the Business Journal seeking comment.
The bankruptcy was filed Tuesday in U.S. Bankruptcy Court in Delaware. No assets or liabilities were listed in the filing.
CalPlant has been in development for nearly three decades, and has been selling medium-density fiberboard for six months, though it is not yet fully operational, according to the bankruptcy filing.
The debtor in this case, CalPlant I LLC, is seeking debtor-in-possession financing of $30 million from the guarantor, CalPlant Holdco I LLC. The majority owners of CalPlant Holdco are pooled investment funds.
To hasten the sale of the plant, the company has entered a “plan support agreement” with its senior bondholders, according to the filing.
In addition to making a needed construction product, the plant also solves a problem for rice farmers in the Sacramento Valley, namely getting rid of rice straw. The plant does it without burning rice straw, which is now largely banned in California, and without putting it into the soil, where it releases methane.
California produces 20% of the rice in the nation, and the Sacramento Valley produces 95% of the rice in the state, according to the University of California Agronomy Research and Information Center.
CalPlant’s location is in the center of the Sacramento Valley, which usually produces more than 1.5 million tons of rice straw waste annually. Once operating at full capacity, CalPlant is expected to process around 280,000 tons of otherwise non-recyclable rice straw. The CalPlant operation could also eliminate the need for post-harvest re-flooding of rice fields, reducing water usage and methane emissions. CalPlant, which has patents on its processes, is the first commercial operation to make medium-density fiberboard.
