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Houston biofuel company files Chapter 7 bankruptcy

Many companies are able to begin their business through utilization of government grants. This was the case in Texas, which gave start-up money to various technology companies via the state's Emerging Technology Fund. However, after the initial financing, many companies required additional funds to continue developing their technology in order to have it ready for the market. Houston bio fuel company Terrabon Inc. had failed to gain the additional funding it needed, which forced it to file for Chapter 7 bankruptcy.

Terrabon had licenses on technologies at Texas A&M University System, which is where the company was formed in order to bring the products to the market. However, the company failed to gain additional funds required to complete the development of a commercial plant. The company's MixAlco technology changes materials like sewage, wood chips, and non-edible crops into renewable gasoline, jet fuel or diesel.

According to its petition, the company holds $22.8 million in debt. One of the debts listed is a $10 million line of credit from Comerica Bank, which is guaranteed by Waste Management. The company also listed a debt of $2.75 million owed to the Texas Emerging Technology Fund. This is at least the fourth company started with the fund to have filed for bankruptcy.

When a business files for Chapter 7 bankruptcy in Houston, it must cease operating and will be forced to liquidate all of its assets. The trustee will oversee the sale of the business property in order to raise funds to repay the company's creditors. However, one of the advantages of this type of bankruptcy is that the petitioner can discharge all of its unsecured debts. Also, this type of bankruptcy is usually simpler and quicker than other options and typically clears the way for the principals to move on to new business ventures.

Source: Hydrocarbon Processing, "Texas biofuels group Terrabon files for bankruptcy," Stephanie Gleason, Sept. 10, 2012

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