BioAmber, a pioneer in Sarnia’s push to diversify its economy, has filed for bankruptcy.
The Montreal-based company that opened its first commercial-scale plant in Sarnia in 2015 announced Friday it filed for relief under Chapter 11 of the U.S. Bankruptcy Code and that its two Canadian subsidiaries, BioAmber Sarnia and BioAmber Canada, filed a notice under the Bankruptcy and Insolvency Act in Canada.
“I’m optimistic someone can come in and continue to keep the company operating,” said Sarnia Mayor Mike Bradley.
“In developing this bio-fuels cluster we always knew, like in any business, there’s going to be winners and losers.”
He said that because the technologies bio-companies like BioAmber use is innovative, “the risk of failure is higher than a traditional industry.”
BioAmber said in a news release the filings are the best way to protect all stakeholders and facilitate the company’s efforts to renegotiate its debt and raise the funds needed to continue operating.
The filings have the effect of imposing an automatic stay of proceedings that will protect its Canadian subsidiaries and their assets from the claims of creditor while efforts are made to restructure, the company said.
PricewaterhouseCoopers Inc. was appointed as the trustee for BioAmber Sarnia and BioAmber Canada.
“This process will provide BioAmber with the time and stability to restructure its finances,” CEO Richard Eno said in the news release.
“This restructuring, combined with the significantly improved cost structure we anticipate, will position BioAmber to emerge as a much stronger company, which will be better positioned to meet the growing global demand we see for our product.”
At its plant on Vidal Street in Sarnia, BioAmber uses corn syrup to make succinic acid, a building block chemical used in products ranging from paints and plastics to cosmetics and food additives.
The company said in the past that it had 60 employees in Sarnia.
It attracted $52 million in federal and provincial funding to help it build its $140-million plant in Sarnia.
In its news release, the company said that failure to achieve its financing and restructuring goals “will likely result in the company and or its subsidiaries being forced to cease operations and liquidate its assets.”
Bradley said he wasn’t surprised by Friday news, considering what has been happening with the company in recent times.
BioAmber’s founding president left the company last year and it was delisted from both the New York and Toronto stock exchanges earlier this year.
BioAmber was one of the first successes of long-term efforts by Sarnia-Lambton to expand its economy beyond its traditional petro-chemical and refining companies in what’s known as Chemical Valley.
After BioAmber set up shop in Sarnia, several other young bio-companies also announced plans to come to the community.
Bradley said he doesn’t believe BioAmber’s move Friday will derail the community’s efforts to create a cluster of bio-industries alongside its traditional chemical manufacturers.
“The momentum is there,” he said.
By Paul Morden
Source: London Free Press
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