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Judge names receiver for KiOR plant, but tax payment unclear

kior logoJACKSON — A Lowndes County judge has appointed a receiver to watch over KiOR’s Columbus biofuel refinery, as owners and creditors seek a buyer.

Chancery Judge Kenneth Burns on Monday named Derek Henderson, a Jackson lawyer who serves as a trustee in bankruptcy cases, as the receiver for the plant. The move came at the request of KiOR financier Vinod Khosla, who says he needs protection after his company Pasadena Investments advanced $572,904 to KiOR’s Mississippi subsidiary to continue property insurance.

Henderson is supposed to inventory the property and work to sell it, with his appointment running until Aug. 1.

While parent company KiOR Inc. of Pasadena, Texas, filed for Chapter 11 bankruptcy reorganization in November, Mississippi unit KiOR Columbus was not included. Mississippi Development Authority officials had hoped for a quick sale to recoup some of the $79 million Mississippi says KiOR Columbus owes on a loan. But Khosla has accused the state of scaring off potential buyers through aggressive courtroom moves.

Mississippi has asked a bankruptcy judge in Delaware to liquidate KiOR, which could stop Pasadena Investments from buying KiOR’s assets and continuing research into turning wood chips into a crude oil substitute. The state also filed a separate lawsuit in Hinds County Circuit Court claiming Khosla and others knew KiOR had limited chances for success but defrauded Mississippi into loaning $75 million to the company anyway.

Under Burns’ order, which Khosla, the state and Lowndes County agreed on, the Mississippi Development Authority will advance money to pay Henderson and other costs. The state will be first in line to get its money back, behind possibly only taxes and fees owed to the county.

It’s unclear how much the state will have to put in to preserve the plant for now. A budget shows monthly expenses currently run almost $170,000, including 11 remaining employees and more than $50,000 a month in utilities. The court order pays Henderson $300 an hour.

Henderson will control the property, the records, and any income generated by the property, and can amend the budget with MDA’s agreement. The judge would have to approve any sale or disposal of property.

The order says the Lowndes County Port Authority can keep $25,000 from KiOR Columbus that it’s holding and that the receiver can pay the rest of an operation fee to the port. But it’s silent on whether the receiver will pay the $272,000 in property taxes due to local governments at the end of the week.

Lawyers for Lowndes County did not immediately respond to requests for comment late Tuesday.

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About Ross Reily

Ross Reily is editor of the Mississippi Business Journal. He is a husband to an amazing wife, dad to 3 crazy kids and 2 dogs. He is also a fan of the Delta State Fighting Okra and the Boston Red Sox.

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