BioNitrogen Holdings Corp files for Chapter 11 Bankruptcy Protection

BioNitrogen Holdings Corp files Chapter 11

On Nov. 3, the renowned clean-tech fertilizer firm BioNitrogen Holdings Corp announced that it had filed for Chapter 11 bankruptcy protection. According to The Wall Street Journal, the company cited its $3.5 million in debt liabilities and a recent lawsuit against it as the primary reasons it sought bankruptcy protection.

BioNitrogen falls into debt

BioNitrogen, the clean-tech firm that produced fertilizer from agricultural waste, had planned to build new plants in Florida. However, in a South Florida Business Journal report, at the time it filed for Chapter 11 bankruptcy protection, the company listed assets between $1 million and $10 million, but had accrued $3.5 million in debt obligations to its largest secured creditor, Annon Consulting.

In fact, in October, Annon Consulting won a lawsuit with the company for $1.4 million as a result of the defaulted loan. BioNitrogen also cited that it had outstanding debts for unpaid federal payroll taxes for $124,318 and to various unsecured creditors, including several consulting firms such as Kaufman Rossin & Co. for $73,594.

BioNitrogen’s six related subsidiaries also filed for Chapter 11 bankruptcy protection on Nov. 3, including BIO-SNG Technologies International Corp., 4A Technologies, BioNitrogen Plant FL Hendry, BioNitrogen Florida Holdings, BioNitrogen Plant FL Taylor and Hendry BN Construction & Fertilizer Services.

The lawsuit

The complaint Annon filed in Florida federal court in January stated that its loan to BioNitrogen had been placed into default status. The WSJ reported that the company did not respond to the complaint until May due to turbulence in its senior executive level that delayed operations.

In court papers, BioNitrogen alleged that its former president, chief financial officer and executive board member Bryan Kornegay Jr. had been responsible for the defaulted loan. Kornegay was charged in 2014 with grand theft in excess of $100,000. However, according to a BioNitrogen report filed with the Securities and Exchange Commission cited by The WSJ, these charges were later dismissed. An internal investigation is currently ongoing as the company claimed that Kornegay mishandled the company’s securities, investor funds and all related transactions, which led to BioNitrogen’s insolvency. According to Mitchell Herr, Kornegay’s lawyer, the company put itself in its tenuous financial position.

“It appears that BioNitrogen is insinuating that Mr. Kornegay engaged in financial impropriety and used BioNitrogen money and that allegation or insinuation is absolutely baseless,” Herr explained.

BioNitrogen listed Kornegay as a debtor in its bankruptcy filing after an assessment by a third-party accounting consultant found that the company in fact owes Kornegay in excess of several hundred thousand dollars.

The reorganization plan

Following the resignation of three members of its executive board, the company has replaced these officials and appointed an auditor, according to an Alternative Energy Stocks report.

BioNitrogen stated in its bankruptcy petition that it intends to seek financing or partnerships and emerge from the reorganization period as a viable business. The tentative debt restructuring proposal calls for the firm to leverage its intellectual property value.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.