Burgess BioPower biomass plant in Berlin. (COURTESY PHOTO)
BERLIN — Arguing the city’s motion is premature as well as factually incorrect, Burgess BioPower is asking the U.S. Bankruptcy Court of Delaware to reject Berlin’s request that it immediately pay $1.39 million in overdue property taxes.
The city filed a motion with the court last month, asking it to label the unpaid taxes a priority and order immediate payment. Berlin complained that six months after Burgess BioPower filed for Chapter 11 bankruptcy it was “still in the dark about how the debtors and lenders plan to pay for the City’s property taxes”.
The owner of the 75-megawatt biomass plant challenged the city’s claim, which it said had two separate components:
- It said the first was a claim for $573,300 in 2023 Renewable Energy Credits taxes. Burgess BioPower argued the REC taxes were incurred before the company filed for bankruptcy and as a prepetition claim are not payable until a reorganization plan is approved.
- The company said the second claim is for $825,000 in ad valorem taxes assessed June 4, 2024. Burgess BioPower charged the city did not indicate the tax year for the bill nor did it provide any basis for the $120 million assessment of the biomass property by Berlin’s utility assessor.
Calling the assessment unsupported, Burgess BioPower pointed out it had conducted a fair and robust sales process that did not turn up any qualified bidders, adding “if there were a buyer willing to pay $120 million for the Debtors’ assets, a motion to approve that sale would already be before the Court.”
Burgess BioPower said it paid the city $800,000 in December 2023 under the terms of the Payment-In-Lieu-Of-Tax agreement negotiated between the city and Burgess BioPower back in 2001. It said the payment covered Oct. 1, 2023 through March 31, 2024.
Burgess BioPower argued the PILOT agreement with the city terminated when the bankruptcy court terminated the purchase power agreement between Burgess BioPower and Eversource earlier this year. The biomass plant owner said it has been attempting to negotiate a new PILOT agreement with the city but the effort has been hampered by the city’s need to adhere to Right-to-Know requirements. Burgess BioPower said it needs to be able to provide financial and valuation information to the city on a confidential basis.
Burgess BioPower said it is working diligently to exit Chapter 11 and acknowledged the process has not gone as swift as it hoped. But it denied that it has kept the city in the dark and cited the strong partnership that has existed between the company and Berlin for many years.
Burgess BioPower said it will pay the 2023 REC taxes and its property taxes when allowed by the claims administration process under the bankruptcy code and the reorganization plan.
While Burgess BioPower hoped for a quick resolution when it filed for Chapter 11 bankruptcy in February, it appears the case will now continue in the court system for at least the remainder of the year.
Earlier this month, the court approved a motion extending the period during which the debtors have the exclusive right to file a chapter 11 plan to Dec. 9, 2024. The motion also extending the period during which the Debtors have the exclusive right to solicit acceptances of a chapter 11 plan to Feb. 3, 2025.
In asking for the extension, Burgess BioPower described the case as of a “meaningful size and complexity” and noted there was over $100 million in pre-petition secured debt. The company pointed out it undertook both a sale process and a reorganization. No qualified buyers submitted bids and the debtors are now pursuing a stand-alone reorganization plan or a plan sponsor.
The city estimates Burgess BioPower represents 16 percent of the city’s tax base.
The biomass plant continues to operate while in Chapter 11. The facility is the largest purchaser of low-grade wood in the state, purchasing about 800 tons of wood annually. Burgess BioPower estimates the plant generates over $70 million annually to the state’s economy and creates 240 direct and indirect jobs.
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