Canola biodiesel processor in receivership

Country Guide in 2014 profiled Milligan Biofuels, whose Foam Lake, Sask. facility is shown here with the company’s first executive manager, local farmer Zenneth Faye. (Photo for Country Guide by Carol’s Photography)

An eastern Saskatchewan biodiesel processor using growers’ heated, green, spring-harvested, tough and otherwise off-spec canola for feedstock is in receivership.

Saskatchewan Court of Queen’s Bench on Thursday appointed Calgary-based insolvency trustee Hardie and Kelly as the receiver for Milligan Biofuels, which operates at Foam Lake, about 90 km northwest of Yorkton.

Alberta’s Crown lending agency ATB Financial had filed an application without notice Wednesday in Saskatoon to seek the hearing the following day.

Such applications, as a rule, are heard at least 14 days from the filing date, but lawyers for ATB, in their filing, described the appointment of a receiver as “a time-sensitive matter.”

ATB’s filing calls in Milligan’s debt of $490,331, mainly from a non-revolving reducing loan.

Milligan, ATB said, had granted the lender security over “the entirety of its assets,” largely in the form of a $6 million mortgage and general security agreement reached in 2011.

An affidavit filed Wednesday by Trina Holland, representing ATB’s turnaround and restructuring group, described Milligan as having “experienced financial difficulty over the past several months.”

Given “the circumstances and the nature of Milligan’s assets, it seems imprudent for ATB to await the passage of 14 days,” Holland wrote, describing receivership as the “only practicable remedy to preserve (Milligan’s) assets,” which include its equipment, machinery, land and buildings.

Milligan, which incorporated as Milligan Bio-Tech in 1996, worked with federal and university researchers to develop a “cold-crushing” system for biodiesel extraction from the oil of low-quality canola.

By 2009, the company had built and opened a biodiesel plant — the first such commercial-scale facility in Western Canada — with capacity to produce 10 million litres of fuel per year from up to 30,000 tonnes of canola.

A plant expansion in 2011 boosted Milligan’s production capacity to 20 million litres per year, requiring over 60,000 tonnes of distressed canola, sourced from across the Prairies and the northern U.S.

The company, which became Milligan Biofuels in 2012, also offered canola meal and canola-based derivatives such as diesel fuel conditioner, penetrating oil, rust inhibitor, road dust suppressant and “asphalt release agents,” used to clean asphalt-handling equipment. — Network

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