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The board of directors of Australian Renewable Fuels (ARFuels), the country’s largest biodiesel manufacturer, has positioned the company into volunteer management.

Under Australian law, voluntary management is a kind of bankruptcy plan, which develops a chance for flexible strategies to bring around a better end result for stakeholders compared to might otherwise take place in liquidation.

The company cites the recent rapidly decreasing oil prices and the resultant raising prices of feedstock, in ARFuels’ situation got oils and also fats.

According to a statement from the company, there has actually historically been a “relatively short time lag” in between dropping costs and also a reduction in feedstock rates.

“At this time, feedstock pricing has actually boosted and the historic lasting correlation in between the barrel rate of oil and the cost price of feedstock has actually broken down,” the company board claimed.

The situation has been made even worse by the dramatic level of the fall in oil rate, which has actually dragged the rate of biodiesel down with it as well as had a significant negative influence on ARFuels’ margins.

According to the board, the continued unpredictability around the Australian government’s biodiesel plan over the recent years has actually even more caused the business “considerable monetary distress” as well as raised its dependence on its debt providers.

No way out

Prior to declaring voluntary management, ARFuels examined a number of choices to reboot procedures when its gross margins would certainly climb once more.

The taken into consideration alternatives consisted of seeking cost rises from clients, pursuing more profitable export sales chances to the United States, in addition to idling production facilities and also minimizing corporate activities.

“However the debt providers have considered their location and have actually rejected these proposals, leaving the board without any choice but to designate a volunteer management,” the board of directors said.

ARFuels has actually appointed David McEvoy and Nick Martin of PPB Advisory, a company advisory, restructuring and bankruptcy services carrier, to serve as volunteer supervisors.

The firm’s board of supervisors and also senior administration intend to function with PPB Advisory to explore all alternatives to maximise the worth for ARFuels’ shareholders.

This piece of writing was created by Ilari Kauppila, deputy editor at Biofuels International

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