U.S. Energy Biogas lender seeks payment on secured claim, objects to plan of reorganization

By Caroline Salls

Pittsburgh, May 15 - U.S. Energy Biogas Corp. lender Countryside Canada Power, Inc. objected to the company's plan of reorganization, arguing that it improperly classifies the lender's $99 million secured claim as unimpaired, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under a previously approved settlement, Countryside was granted a $99 million claim against U.S. Energy Biogas, to be paid in three installments by Jan. 31, March 31 and May 31.

Countryside said U.S. Energy Biogas has not been paying on its claim in full when due, and the lender asked the court to confirm the amount of its claim in light of the company's "persistent late and insufficient payments."

According to the objection, U.S. Energy Biogas is also in default under its cash collateral agreement, and Countryside has been charging default interest on its secured claim.

Countryside said the company refuses to recognize the defaults.

In addition, Countryside said the company is required to close on exit financing by May 31 that gives it enough net proceeds, together with cash on hand, to pay off Countryside's secured claim and all general unsecured claims.

The lender said U.S. Energy Biogas does not yet have a binding agreement for the required exit financing, which is a condition of plan effectiveness.

U.S. Energy Biogas, an Avon, Conn.-based renewable energy business, filed for bankruptcy on Nov. 30, 2006. Its Chapter 11 case number is 06-12827.

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