Hereford Biofuels trustee settles Idaho Energy claim for $2.49 million

By Caroline Salls

Pittsburgh, May 2 - Hereford Biofuels, LP's Chapter 7 trustee is seeking court approval of a vendor purchase agreement claim settlement with Idaho Energy LP, according to a Tuesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Chapter 7 trustee Daniel J. Sherman said in the motion that Hereford entered into an agreement with Idaho Energy in September 2005 for equipment and services related to a fluidized bed gasifier and biomass fuel receiving and storage handling system. Hereford was the buyer under the agreement and Idaho Energy the seller.

Sherman said the original contract price under the agreement was $24.22 million. That price was increased to $25.56 million under six written change orders.

According to the motion, Hereford paid $23.07 million under the agreement, leaving a balance of $2.49 million.

The trustee said the balance was supposed to be paid upon final acceptance of equipment, which never occurred.

In addition to the $2.49 million, Idaho Energy claims Hereford owes $474,876 in damages in connection with the company's delay in completing construction of an ethanol facility.

Under the settlement, Idaho Energy will have a $2.49 million general unsecured claim against Hereford. The delay damages will be disallowed under the proposed agreement.

A hearing is scheduled for May 30.

Dallas-based Panda Ethanol develops ethanol fuel plants. Its Hereford subsidiaries filed bankruptcy on Jan. 29, 2009. Their Chapter 11 cases are being administered under case number 09-30453.

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