The filing came after Brightmark Plastics missed a roughly US$13mil debt payment due on March 1. — Bloomberg
NEW YORK: An Indiana recycling plant that tapped municipal bond investors for capital six years ago has filed for bankruptcy after the facility was marred by design flaws and production sputtered.
Brightmark Plastics Renewal LLC, which converts waste plastic into fuel, filed for Chapter 11 last Sunday, listing assets and liabilities between US$100mil and US$500mil.
The plant employs 113 people and has US$172.5mil in outstanding municipal bonds.
The filing came after Brightmark Plastics missed a roughly US$13mil debt payment due on March 1.
The plant’s owner, San Francisco-based Brightmark Energy, had contributed more than US$211mil in equity and determined it couldn’t keep investing in the project, according to a court filing.
The company’s bonds last traded at about 16 US cents on the dollar on Feb 10. They were issued in March 2019.
Bob Powell, Brightmark’s chief executive officer, didn’t respond to a voicemail and email seeking comment.
Recycling projects across the US have been plagued by a range of issues in recent years, from lower-than-expected demand to ballooning production costs.
About US$1bil of the US$9.3bil in so-called green municipal industrial development bonds are in default, according to data compiled by Bloomberg. Located in Ashley, Indiana, the Brightmark plant feeds everything from beverage bottles to car seats into reactors and then heats the plastic, in the absence of oxygen, until hydrocarbons turn into vapour.
The hydrocarbon vapour is cooled into pyrolysis oil and then cut into various fuels, including diesel.
The facility, which opened in 2022, was beset by a number of problems, according to a court filing by Brightmark Plastics’ chief restructuring officer, Craig R Jalbert.
The plant required major reengineering and redesign, and a unit necessary to turn the oil into wax didn’t work, according to Jalbert’s filing.
In addition, Brightmark decided to focus on producing pyrolysis oil after determining that fuel production was unprofitable.
The plant, built to process 100,000 tonnes of plastic waste per year, operates at just 5% capacity.
AllianceBernstein Holding LP funds was the largest holder of Brightmark Plastic’s bonds, with about US$56mil as of Jan 31. Pacific Investment Management Co held US$50mil as of Dec 31.
Carly Symington, a spokesperson for AllianceBernstein, didn’t respond to a request for comment. Agnes Crane, a Pimco spokesperson, declined to comment.
Brightmark has hired SSG Advisors, LLC to sell the plant. Along with a bridge lender, Brightmark has agreed to provide debtor-in-possession financing to keep the plant open through the sale.
“There is a strong demand for the debtors’ product as it allows its customers to incorporate into their manufacturing processes a product made from approximately 60% post-consumer plastic waste instead of virgin fossil fuels,” Brightmark’s Jalbert wrote in the filing. — Bloomberg
