JASPER CO.—Work is apparently continuing at the Blue Northern National Trail Biodiesel plant in Newton, but multiple filings in Jasper County circuit court may spell out trouble for the facility and its future.
Known as BN National Trail Biodiesel, the facility, located south of Newton, has been touted as one of the main players in the biodiesel industry due to its location in the Midwest, as well as the proximity to Illinois’ major soybean crops, from which it is set to extract oil that will become fuel.
However, biodiesel hasn’t taken off as the savior of America’s fuel crisis since the alternative fuel push first began when gas prices went on a ridiculous rise following 9/11 in 2001.
And facilities that turn food into fuel have, nationwide, not seen the expansion that was touted in the early 2000s; instead, many proposed—and partially-built—facilities have closed down altogether, leaving investors high and dry and with no recourse except to go to the court systems.
While progress continues at BNNT in Newton, the unfortunate turn as of July is that claims filed against the corporation two years ago as “mechanic’s liens” have now turned into lawsuits; and worse, a local bank that provided the main funding for the facility has filed a complaint for foreclosure as well.
Foreclosure filed by bank in Iuka
Paperwork filed in Jasper County circuit court July 22, 2014, shows that the Iuka State Bank filed a three-count complaint against BNNT, as well as three other Delaware limited liability companies, Urban Development Fund XIX LLC, UDF XII SPE C, LLC and Blue Northern NT Holdings LLC; as well as Anthony J. Quinones; Hi-Tech Industrial Services Inc. of Texas; three Illinois corporations, Consolidated Pipe & Supply Company Inc., Plocher Construction Company Inc. and ILMO Products Company; and National Steel Erection, Inc., a Kentucky corporation.
The mortgage, in the original amount of six million dollars, was filed March 7, 2014 in Jasper County. The Iuka bank mentions in its filing the two mechanic’s liens recorded against the property, and states that BNNT hasn’t furnished the bank with adequate reserves to discharge the liens.
Further, the bank states that BNNT hasn’t paid the installments from June 2 to the time of filing…meaning that BNNT made a total of two payments on the mortgage before defaulting.
The principal of $5,936,456.63, along with interest of $42,668.28 and late charges of $4,982.46, brings the current total owed to $5,984,107.37.
The bank is also asking for a per diem (per day) interest rate of $948.18, court costs, title costs, attorneys’ fees and further advances.
The other parties over and above BNNT are joined in the suit because the bank says they have interest in or lien on the mortgaged real estate, sought to be terminated (in other words, the bank is asking the court to order that BNNT and any interested parties pay back the bank before they pay back anyone, or in the case of the parties, before BNNT pays them back on any of their claims against BNNT.)
The bank is asking the court to enter a judgment of foreclosure and sale; an order placing the bank in possession of the property; a personal judgment for any deficiency; an order granting possession of the premises effective 30 days after entry of the order confirming the foreclosure sale and evicting any remaining occupants without further notice; a judgment for attorneys’ fees, costs and expenses; and, in the event that the bank is the successful bidder at the sale, that the bank be allowed to offset against the purchase price.
Quinones as guarantor
A second count in the foreclosure filing singles out Anthony J. Quinones, who was a guarantor on the mortgage (meaning if BNNT defaulted, he would step in and make payments.)
The bank is asking in the second count for Quinones to make good on the six million that they’re claiming BNNT has defaulted on.
A third count of same lists Blue Northern NT Holdings LLC as another guarantor, and asks that the court order payment from them, as well, on the six million, the hope being that someone/something will step forward and pay up.
Quinones and each of the entities were served summons on the complaint, the summonses issued on July 22.
Steel company files
The foreclosure wasn’t the only filing, however, against BNNT or one of its subsidiaries/holders.
Back in May, National Steel Erection, Inc., filed a verified complaint for damages and enforcement of settlement agreement as it pertains to the mechanic’s lien filed with the county clerk in the Spring of 2012, which was covered in the June 2012 edition of Disclosure in full.
On May 19, the Kentucky corporation filed against BN National Trail Biodiesel LLC in Chicago. National Steel Erection (NSE) specializes in heavy mechanical construction for the power industry, and was brought in to build and construct the biodiesel generation facility on the premises south of Newton; said construction began in August 2011. They claim that BN stopped paying on invoices as of February 3, 2012, which prompted NSE to file the mechanic’s lien for $1,160,506.42.
The companies reached a settlement agreement in 2012, with a payment deadline of December 9, and if the agreed-upon initial payment of $950,000 wasn’t made by that time, the demand would revert to the full amount plus fees, collection costs and anything else resulting from having to force collection of the balance.
Deadlines weren’t met, and NSE is claiming the full principal amount is now owed.
ILMO filed
Likewise, ILMO Products Company subsequently filed a complaint on July 14 similar to NSE’s.
ILMO provided storage tanks for the storing of delivered liquid nitrogen, essential in the conversion of a vegetable to a fuel, as well as providing the liquid nitrogen to the facility.
ILMO stated that BNNT’s first delivery of bulk liquid nitrogen was made on or about September 18, 2013, and orders continued since December 30, 2013…however, BNNT, ILMO claims, hasn’t made any payments on the liquid nitrogen.
ILMO claims on an exhibit that BNNT owes $43,937.79 for the deliveries alone, and are asking that amount and associated fees and costs be ordered paid.
BNNT has asked for an extension for time to plead, in both NSE’s and ILMO’s suits.
But that isn’t all they’re facing or have faced.
Small Claims settled
Two Small Claims cases had also been filed against the biodiesel company, these brought by individuals who did work on the construction of the facility in various capacities.
The first was filed by Eric Smithenry of Newton, who claims he provided rental of Maxi-Lite light plant (light towers) to BNNT, for which they did not pay.
His claim, filed June 11, 2014, was for $4,500. A note in the file indicated that on July 1, BNNT had satisfied the claim without it having to go to judgment, this on the day it was set to be heard in court.
Likewise, on Barrett Hill, of West Liberty, had filed an identical claim (regarding the Maxi-lite Light Plant rental) on the same day, June 11, for the same amount; it too was settled July 1, the day.
The Madison County case
Jasper County’s isn’t the only such set of cases BNNT has been involved in over such circumstances, however.
According to the Madison Record out of Madison County, Illinois, Plocher Construction Company filed a lawsuit March 21, 2013, against Quinones and BNNT, Blue Northern Energy, Blue Northern NT Holdings and a number of individuals.
In the complaint, Plocher stated they’d invested $200,000 into National Trail Biodiesel in Newton, with an additional investment coming along in May 2010 of $20,000. Plocher did plumbing work for a total of $310,000 for BNNT at the site, as well as built a new pole barn for the group.
But when BN National purchased the National Trail Biodiesel Group (a group of farmers in and around Newton who were the startup group of the project), BN National promised to repay Plocher for its investments as well as construction work, in the form of 785,000 shares of BN National membership interest. Plocher claims it owned 7.634 percent of the company.
When Plocher asked for repayment of a $647,000 promissory note, a dispute arose over it, and in March of 2012, Plocher stated in it’s suit, they found out their membership interest in BN had dropped to 1 percent.
Plocher claimed that the board of managers of the corporation “removed or diluted Plocher’s membership interest in BN National as a result of the dispute,” which was “wholly separate from the contract and capital contribution Plocher made to BN National.”
Requesting they and other members be provided with “audited and unaudited financial statements and to make corporate record books available to all members,” Plocher filed a suit that also sought at least $1,579,254.14 plus interest, punitive damages of at least $50,000, costs, attorneys’ fees and other relief, the case was transferred to Cook County in December 2013 and is working its way through there.
Expensive jobs
Disclosure contacted BNNT via email on Monday, August 4.
Greg Champe, Senior Vice President, Bn2 Capital Holdings, LLC and Plant Manager, BN National Trail, LLC, responded about the situation with the following:
“Yes there are some claims which were filed but the plant continues to build and the claims will be resolved. We can’t tell you how they will be resolved at this point due to the sensitive and confidential nature of the negotiations between the parties.”
According to BNNT’s website, work progresses on the plant, which is said to be bringing 30 jobs to Newton…and for court cases that have cost or are asking for sums reaching into the millions, that’s a rather expensive set of jobs for impoverished southern Illinois.
