Rialto Bioenergy Facility LLC, an entity developed and majority-owned by Anaergia, filed for Chapter 11 bankruptcy in the Southern District of California on Thursday, seeking to buy more time for a facility that executives have acknowledged is struggling to bring in feedstock.
The Ontario-based organics recycling and biogas company said in a press release that it plans to continue operating the facility during the restructuring process. RBF was touted as the largest food waste diversion and energy recovery facility in North America when it opened in 2020, and can process up to 700 tons of food waste and 300 tons of biosolids per day.
But the facility has been slow to ramp up operations. Executives say that's largely due to Los Angeles delaying enforcement of its SB 1383-compliant organics collection measures due to pandemic-related challenges.
"RBF is strongly supported by the State of California and is critical to the success of SB 1383," Chief Operating Officer Yaniv Scherson said in a statement. "We are confident that these actions will help protect the value of RBF and allow it to emerge as a stronger company.”
Los Angeles Sanitation & Environment declined to comment on the RBF bankruptcy or the owners’ frustration about delays.
In its statement, Anaergia acknowledged that the facility "has been unable to produce sufficient revenue to cover its costs and debt service." Chapter 11 bankruptcy would give Anaergia extra time to pay its debts.
It would also give Anaergia temporary relief from providing additional loans or equity to the facility, positively impacting its cash flow at a time when the company has had to overhaul its development strategy.
During Anaergia's Q1 earnings call on May 12, CEO Andrew Benedek said “we can't do business as usual” and noted changes ahead. The company announced a new capital-light strategy in which it would cease developing facilities without an equity partner and instead derive revenues from development and operations of organics recycling facilities.
The bankruptcy filing is not expected to materially change Anaergia’s earnings guidance for this year, according to Thursday’s release.
RBF's assets and liabilities are both estimated to be in the $100 million to $500 million range, according to the bankrupty filing. RBF owes $667,111.07 to R&S Industrial Field Services, its largest creditor and general contractor. Other private creditors include Denali Water Solutions, to which RBF owes $61,642.36, and WM, to which RBF owes $36,021.27. RBF also owes $309,477.60 to the Santa Ana Watershed Project Authority and $77,365.54 to the City of Rialto, its two largest public creditors.
