Feb. 2 (Bloomberg) -- Renew Energy LLC, the closely held ethanol producer based in Jefferson, Wisconsin, filed for bankruptcy and plans to sell itself amid falling prices for the grain-based fuel and rising costs for corn.

The 6-year-old company listed both assets and debt of more than $100 million in Chapter 11 papers filed Jan. 30 in U.S. Bankruptcy Court in Madison, Wisconsin. The company, which last year had revenue of $184.2 million, sought court approval of a $2.5 million emergency loan from West Pointe Bank to replenish its dwindling corn supply, court papers show.

“After consumption of that inventory, it will be unable to produce ethanol and sell product to consumers,” Renew Energy said in court papers. “This will result in catastrophic customer loss, and destroy debtor as a going concern business.”

Ethanol producers were forced to reduce capacity in January as volatile corn prices curtailed profit. Producers have idled about 1.8 billion gallons, or 16 percent, of total U.S. production capacity, according to the Renewable Fuels Association in Washington. There are 180 ethanol distilleries in the U.S.

Renew Energy’s debt includes $104.6 million owing on a construction loan by Bankers’ Bank and $11.7 million owing on a revolving credit facility from the same lender. The company also has $37 million of unsecured trade debt and owes $38 million on revenue bonds issued by Aztalan, Wisconsin, court papers show.

Large Plant

A call to Renew Energy spokesman Robert Welch wasn’t immediately returned.

Renew Energy said its plant, with 80 employees and a production capacity of 110 million gallons of ethanol a year, is one of the largest of its kind. The plant’s 2006 ground-breaking ceremony was attended by Wisconsin Governor Jim Doyle, according to the company’s Web site.

Renew Energy said that selling the plant as a going concern will maximize recovery for creditors. Its biggest unsecured creditor is Wisconsin supplier Olsen’s Mill Inc., with a $20 million claim, court papers show.

Cascade Grain Products LLC, a closely held ethanol producer based in Vancouver, Washington, halted production at its $160 million plant and filed for Chapter 11 bankruptcy on Jan. 28. Earlier in January, Northeast Biofuels LP filed for bankruptcy, citing a contractor’s failure to complete a plant properly. Denco LLC, of Morris, Minnesota, halted output at its 25 million- gallon-a-year refinery, citing market conditions.

VeraSun Energy Corp., the second-largest U.S. ethanol producer, filed for bankruptcy in October after losing $63 to $103 million in corn hedging and a $100 million stock offering failed. VeraSun is based in Sioux Falls, South Dakota.

Ethanol Output

U.S. ethanol output rose 3.2 percent to 668,000 barrels a day in November from 647,000 in October, according to the most recent data from the Energy Department. Production was 39 percent higher than a year earlier.

The renewable fuels standard or RFS requires the U.S. to use 11.1 billion gallons of biofuels, such as ethanol, this year. The grain-based additive is blended with gasoline to stretch supplies and meet federal mandates.

The Energy Independence and Security Act of 2007 mandates the U.S. use 15 billion gallons a year of ethanol and 1 billion gallons of biodiesel by 2015. The plan also requires the use by 2022 of 16 billion gallons of cellulosic ethanol derived from non-food crops such as switch grass and wood chips.

The case is In re Renew Energy LLC, 3-09-10491, U.S. Bankruptcy Court, Western District of Wisconsin (Madison).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.

Last Updated: February 2, 2009 11:55 EST