Anaergia unit Rialto ‘declared war on its bondholders,’ trustee says

By Sarah Lizee

Olympia, Wash., June 27 – Anaergia Inc. subsidiary Rialto Bioenergy Facility, LLC’s motion seeking final approval to access cash collateral and obtain debtor-in-possession financing drew an objection from bond trustee UMB Bank, NA, according to documents filed Monday with the U.S. Bankruptcy Court for the Southern District of California.

UMB said the company filed bankruptcy without any advance notice to the trustee or the majority bondholders, parties that are integral to the debtor’s continued viability and future success.

As such, the parties were unable to work with the debtor to alleviate its financial distress on a consensual basis, which likely would have obviated the need to seek contested relief from the court, UMB said.

UMB said that after the bankruptcy filing, it delivered a term sheet to the debtor for consensual post-petition cash usage and financing, but the debtor hasn’t responded.

“Rather than engage consensually, the debtor declared war on its bondholders,” UMB said in the objection.

“The debtor’s casus belli DIP motion seeks to seize collateral expressly pledged to and reserved for the bondholders and to deprive the bondholders of the benefit of their bargain, including their rights to their own funds held and administered at the trustee under the bond documents.

“By choosing to pursue relief that flatly contradicts the bond documents it signed and applicable law, the debtor sets its estate down a value-destructive litigation path that is far from in the best interest of the estate.”

Anaergia is a Burlington, Ont.-based company that was created to turn organic waste into renewable natural gas, fertilizer and water, using proprietary technologies. Subsidiary Rialto Bioenergy is based in Carlsbad, Calif., and filed Chapter 11 bankruptcy on May 25 under case number 23-01467.

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