Trash-To-Gas Plant Operator Hits Ch. 11 With $456M Of Debt

Fulcrum BioEnergy Inc. has commenced a Chapter 11 case in Delaware, saying it was forced to shutter its waste-to-gasoline plant in Nevada and is looking to complete a sale of the facility through the bankruptcy process.

Chief Restructuring Officer Mark J. Smith said in initial court filings Monday that operational struggles at Fulcrum’s Sierra biofuel facility led to liquidity constraints for the debtor. Those cash challenges hampered the company’s plan to expand its business with additional energy conversion facilities that make aviation fuel out of household garbage, according to Smith.

Started by energy industry veterans in 2007, Fulcrum began operations at the Sierra facility outside Reno, Nevada, in 2022, having already secured municipal solid waste procurement contracts from multiple partners, as well as fuel purchase agreement with more than half a dozen customers, including major airlines. By the time its plant opened, Fulcrum had commitments from purchasers for more than 1.5 billion gallons of aviation fuel derived from garbage, Smith said in a declaration.

The company came to court with more than $450 million of funded debt in the form of a term loan, promissory notes and a series of convertible bonds, according to the filing.

While getting its Sierra facility up and running, Fulcrum ran into novel operational challenges due to the cutting-edge nature of its business, Smith said. These hurdles required extensive capital to remedy, as the machinery involved in the waste-to-fuel conversion process are all customized for Fulcrum’s operations, he said. The facility ceased operations in May 2024, and plans to build additional sites in Indiana and the U.K. were dropped.

Multiple attempts to raise capital and keep the business humming were unsuccessful, and Fulcrum began searching for a transaction partner to acquire the business in late 2023, according to the declaration.

That process recently resulted in a commitment from Switch Ltd. to provide $5 million in debtor-in-possession funding and enter into an asset purchase agreement to acquire the business for $15 million in cash. The stalking horse bid will be tested through an in-court sale and marketing process, though Fulcrum intends to move through that process quickly, Smith noted.

The Chapter 11 case was assigned to U.S. Bankruptcy Judge Thomas M. Horan, who will hold a first-day hearing at 11 a.m. Thursday in Wilmington, Delaware.

The debtor is represented by Robert J. Dehney Sr., Dan B. Butz, Clint M. Carlisle and Avery Jue Meng of Morris Nichols Arsht & Tunnell LLP.
The case is In re: Fulcrum BioEnergy Inc., case number 1:24-bk-12008, in the U.S. Bankruptcy Court for the District of Delaware.

—Editing by Covey Son and Alyssa Miller.