Louisiana pellet mill files for Chapter 11 bankruptcy

By Erin Voegele | February 22, 2016

On Feb. 18, subsidiaries of German Pellets associated with its Louisiana-based pellet plant filed Chapter 11 bankruptcy petitions with the U.S. Bankruptcy Court for the Western District of Louisiana. Petitions were filed by Louisiana Pellets Inc. and German Pellets Louisiana LLC.

According to information published by the court, Louisiana Pellets, which is a wholly owned subsidiary of IPBG Pellets Beteiligungs GmbH, must file its Chapter 11 plan by June 17. German Pellets Louisiana, which is owned by German Pellets Holding USA Inc., must also file is Chapter 11 plan by June 17.

German Pellets GmbH recently filed for insolvency. On Feb. 10, German Pellets issued a statement noting had petitioned the insolvency court in Schwerin, Germany, to restructure through bankruptcy proceedings under its own administration. The company also said it intends to continue its business operations in full during the preliminary insolvency proceedings.

According to German Pellets, economic difficulties were the result of three primary factors, including the dramatic decline in oil prices, lower pellet revenues resulting from two warm winters, and a bad investment the company made in 2010 in KAGO, a furnace manufacturer.

On Jan. 27, German Pellets issued a press release stating despite the current drop in oil prices, the market opportunities for the pellet sector are assessed to be positive. The release cites London-based consultancy company Hawkins Wright as forecasting an increase in global demand for pellets, up to nearly 49 million metric tons per year in 2019, up from 29 million metric tons in 2015.