Viridis Chemical: Illinois Plant Sale Drives Chapter 11

Viridis Chemical, LLC and four affiliated debtors filed chapter 11 petitions on March 8, 2026, in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The cases center on a stalled chemical-plant construction project in Peoria, Illinois, where cost overruns, construction delays, and a weakened ethyl acetate market forced the company to pause work and seek court-supervised alternatives. The debtors are non-operational and generating no revenue as of the petition date.

The filing is structured around an expedited section 363 sale of substantially all assets. A prepetition marketing process reached approximately 200 potential purchasers, with about fourteen executing nondisclosure agreements before the petition. The proposed sale calendar targets a May 8, 2026 sale hearing — two months from the filing date. Liquidity during the case is supported by consensual use of cash collateral with secured noteholders rather than debtor-in-possession financing.

Debtor(s)	Viridis Chemical, LLC (5 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	26-90393
Petition Date	March 8, 2026
Judge	Hon. Christopher M. Lopez
Claims Agent	Epiq Corporate Restructuring

Filing Background and Causes of Distress

Viridis Chemical produces renewable and low-carbon chemicals, including biobased ethyl acetate derived from corn-based feedstocks. Its principal asset is a chemical plant in Peoria, Illinois, relocated from Columbus, Nebraska during 2025.

Corporate origins and technology. Viridis was founded by its private equity sponsors — an affiliate of EIV Capital (EIV Viridis Chemical, LLC) and a minority investor — to acquire the plant assets and intellectual property of Prairie Catalytic, LLC, a subsidiary of Greenyug, LLC, which had developed the original patent for renewable ethyl acetate. Prairie Catalytic completed construction of a chemical plant in Columbus, Nebraska in 2019, adjacent to an Archer Daniels Midland ethanol facility, but was unable to bring the plant to commercial operation because the ADM facility could not produce ethanol of sufficient purity. Viridis purchased Prairie Catalytic's assets out of a receivership in 2021 for $8 million in cash and a $4 million subordinated unsecured note. Through its proprietary Prairie Green catalytic process, the company produces ethyl acetate using 100% corn-based ethanol instead of hydrocarbon feedstocks. The main byproducts — water and hydrogen gas — are reused as heating fuel in the plant, resulting in approximately 80% lower emissions compared to conventional ethyl acetate production. At full capacity, the plant is expected to produce roughly 100 million pounds of ethyl acetate per year and is designed to run continuously. The company has only two North American competitors and competes with a limited group of foreign importers.

Nebraska operations and relocation rationale. Following the 2021 acquisition, Viridis brought the Nebraska Plant to limited operations by sourcing railcar supply of corn-based, pharmaceutical-grade ethanol from BioUrja Renewables, LLC in Peoria. During that period, the company's renewable ethyl acetate was quality tested and approved for purchase by nearly 40 customers in the United States and Europe. However, the Nebraska Plant experienced persistent operational challenges and could not achieve sustainable, cost-competitive operations without access to lower-cost or on-site purified ethanol. The company announced the relocation to Peoria in November 2024, citing a projected margin expansion exceeding 20%, closer proximity to core customers in the Midwest and Northeast, and access to major rail lines and barge-navigable routes connecting to the U.S. Inland Waterways. The Peoria site is co-located with BioUrja's high-purity, corn-based ethanol plant, and the companies entered long-term agreements covering ethanol supply, utilities, cooling water, and waste-water treatment.

The First Day Hearing Exhibits describe a reconstruction project that was not feasible without new capital. The Peoria plant relocation involved moving major components from Nebraska to Illinois by summer 2025, but cost overruns and construction delays consumed available liquidity. The initial total budgeted cost of Peoria plant construction was approximately $26.7 million, with Sterling Global Industries' contract scope estimated at roughly $14.9 million. The actual cost increased significantly: the company paid Sterling a total of $21.5 million from January 2025 through December 2025, well in excess of the original budget. Due in part to multiple replacements of Sterling's project manager, cost reports were inconsistent in frequency, content, and quality, and beginning in July 2025, Sterling presented invoices significantly higher than any forecast. Unforeseen additional costs included additional regulatory requirements associated with locating the plant in an urban area, unexpected equipment maintenance, increased transportation costs, and the imposition of tariffs on Indian steel imports. The company also decided to replace a key component — the dehydration system responsible for removing water from the ethanol stream — due to reliability issues at the Nebraska Plant. The replacement was contracted with an India-based company described as the only supplier in the world capable of manufacturing a dehydration system of the required size and specifications. Delivery of the dehydration unit was delayed by new tariffs and transportation logistics, leaving some pieces in shipping containers in a bonded warehouse at the port of entry in Houston. The plant cannot function without this key component. Market distress in the ethyl acetate and ethanol spread further reduced the project's economics. In the second half of 2025, the price difference between ethyl acetate and ethanol — known as the "spread" — fell by approximately 26%. Tariffs on imported equipment also pushed project costs higher. By the petition date, construction had been paused and the company was non-operational.

Prepetition restructuring steps. In December 2025, investors — including EIV Capital — flagged concerns, and the board appointed Mark McDermott as an independent director and sole member of a newly formed special committee. McDermott, a former restructuring lawyer with over three decades of experience at an international law firm, was delegated binding decision-making authority on matters constituting or reasonably likely to constitute a conflict of interest between Viridis and its related parties. The company engaged Carl Marks Advisors and paused construction to preserve remaining liquidity. In early February 2026, Viridis retained Vinson & Elkins LLP as legal counsel and expanded Carl Marks' role to include investment-banking services for strategic alternatives.

Capital Structure

The First Day Hearing Exhibits put total funded debt at approximately $17.3 million as of the petition date, consisting of roughly $13.5 million in principal and approximately $3.8 million in accrued and unpaid interest. The voluntary petition lists estimated assets and estimated liabilities each in the $10 million to $50 million range, with between 50 and 99 creditors.

Secured notes. The secured tranche consisted of approximately $10.0 million of senior secured convertible promissory notes bearing 12% annual interest, increasing to 15% during an event of default, with a September 2025 maturity. The notes were issued under a Note Purchase Agreement dated August 8, 2023, among Viridis as issuer, two subsidiary guarantors (Viridis Chemical NE Asset Co 1, LLC and Viridis Chemical NE Asset Co 2, LLC), affiliates of EIV Capital and the minority investor as purchasers, and EIV Viridis Chemical, LLC as collateral agent. The notes were secured by liens on substantially all assets of the secured-note parties.

Subordinated notes. The subordinated tranche consisted of approximately $3.5 million of unsecured notes bearing 7% interest, also maturing in September 2025. Subordination was governed by an intercreditor agreement dated March 7, 2025, among the subordinated noteholders and the collateral agent under the secured notes.

Mechanics' liens. The construction project carried a disputed lien overhang. General contractor Sterling recorded a mechanics' lien in Peoria County on February 6, 2026, for approximately $6.1 million. The debtors contend that approximately half of the disputed amount relates to unapproved expenses incurred outside of purchase orders. Additional subcontractors asserted mechanics' liens in the period leading up to the filing. The debtors dispute the validity and amount of those liens.

Trade claims. The first-day materials estimate up to roughly $4.0 million of unsecured trade claims, consisting primarily of amounts owed to suppliers of engineering, construction, and equipment services for the Peoria plant reconstruction. The voluntary petition indicates the company has between 50 and 99 creditors, and that once administrative expenses are paid, no funds will be available for distribution to unsecured creditors.

Cash Collateral

The debtors did not file a DIP financing motion. Instead, they sought authority to use cash collateral on a consensual basis with the secured noteholders through a cash collateral motion. The First Day Hearing Exhibits state that all available cash was subject to the secured noteholders' liens and that the debtors could not obtain additional financing from existing lenders or third-party investors. Because the company is not currently operational, it has primarily depended on borrowings under its Note Purchase Agreement and capital calls from its equity holders as its source of cash.

The Henson Declaration filed by Paul M. Henson Jr., a Managing Director at CMA Group, confirms that prepetition negotiations with the secured noteholders resulted in an agreement allowing use of cash collateral subject to certain conditions, including an agreed-upon budget. The declaration states that access to cash collateral is essential to the debtors' ability to continue the marketing and sale process and that an immediate and critical need exists for the relief.

The proposed cash collateral budget covers payroll, chapter 11 administrative costs, and the section 363 sale effort. The proposed adequate-protection package included replacement liens on postpetition assets, superpriority administrative expense claims to the extent of diminution in value (subject to a carve-out), budget compliance with permitted variances, and monitoring and reporting covenants.

Section 363 Sale Process

The sale motion seeks authority to market and sell substantially all assets free and clear of liens, claims, interests, and encumbrances through an expedited section 363 process, and to assume and assign executory contracts and unexpired leases to the winning bidder. The debtors began a prepetition marketing effort in February 2026, contacting approximately 200 potential purchasers. About fourteen parties executed nondisclosure agreements before the filing.

The proposed sale milestones are:

Indication of Interest Deadline	April 15, 2026
Stalking Horse Designation Deadline	April 20, 2026
Bid Deadline	April 27, 2026
Auction (if needed)	April 29, 2026
Notice of Winning Bidder	May 1, 2026
Sale and Assumption/Assignment Objection Deadline	May 5, 2026
Sale Hearing	May 8, 2026

The motion also sought authority to designate one or more stalking horse bidders and to provide bid protections. Expense reimbursement could be approved up to $75,000, and any break-up fee could not exceed 3% of the cash portion of the stalking horse purchase price. Approved protections would be treated as a superpriority administrative expense claim.

The sale motion outlines bidding procedures that give the debtors discretion, in consultation with consultation parties, to set the minimum consideration, terms, conditions, and qualification criteria for any party to be considered a qualified bidder. The procedures also address designation of a back-up bid, return of good-faith deposits, and other sale-process mechanics.

On contract transfer mechanics, the debtors proposed assumption-and-assignment procedures under which counterparties would receive cure notices and would need to object by the May 5, 2026 deadline.

Professional Retention and Case Administration

The court held an emergency first-day hearing at 4:00 p.m. Central Time on March 9, 2026, one day after the petition. The joint administration order designates Viridis Chemical, LLC as the lead debtor under Case No. 26-90393, with four affiliate cases administered under the consolidated caption. The four affiliates are Viridis Chemical Payroll Holdings, LLC; Viridis Chemical Payroll, LLC; Viridis Chemical NE Asset Co 1, LLC; and Viridis Chemical NE Asset Co 2, LLC. The court also entered a complex chapter 11 case treatment order.

Epiq Corporate Restructuring, LLC was approved as claims, noticing, and solicitation agent through an Epiq retention order entered March 9, 2026. The order designates Epiq as the repository for proofs of claim and authorizes standard administrative claims-management functions.

Paul E. Heath of Vinson & Elkins LLP serves as lead bankruptcy counsel. Patrick D. Killian, the company's chief executive officer, signed the petition. Killian holds a bachelor's degree in chemical engineering from Cornell University and an MBA from the University of Michigan, and joined Viridis in April 2024 after serving as Vice President of Strategy and Marketing at Monument Chemical and as a Global Business Director at Dow Chemical. Mark Barta serves as chief financial officer. Carl Marks Advisors serves as financial advisor and investment banker; Paul M. Henson Jr. of CMA Group filed the supporting declaration for the cash collateral motion. As of the petition date, the debtors employ ten individuals on a full-time or part-time basis, with payroll administered through co-employer Insperity PEO Services, L.P.

Case Timeline and Next Steps

November 2024	Plant relocation from Columbus, Nebraska to Peoria, Illinois announced
January 2025	Sterling Global Industries engaged as general contractor; Nebraska Plant disassembly begins
Summer 2025	Majority of plant components and equipment arrive on-site in Peoria
December 2025	Construction paused; special committee formed; Carl Marks engaged
Early February 2026	Vinson & Elkins retained; Carl Marks expanded to investment-banking role
Mid-February 2026	Investor outreach process began (~200 parties contacted)
February 6, 2026	Sterling mechanics' lien recorded for ~$6.1 million
March 8, 2026	chapter 11 petitions and first-day motions filed
March 9, 2026	Joint administration, complex-case, and Epiq retention orders entered
April 15, 2026	Proposed indication-of-interest deadline
April 27, 2026	Proposed bid deadline
April 29, 2026	Proposed auction
May 8, 2026	Proposed sale hearing

The sale motion sets the next milestones at the April 15 indication-of-interest deadline and the April 27 bid deadline. No stalking horse bidder had been designated as of the petition date. The Henson Declaration supporting the cash collateral motion details the liquidity constraints governing the sale timeline.

Frequently Asked Questions

What does Viridis Chemical produce?

Viridis Chemical produces renewable and low-carbon chemicals, including biobased ethyl acetate derived from corn-based feedstocks. The company's proprietary Prairie Green catalytic process uses 100% corn-based ethanol and produces approximately 80% lower emissions than conventional ethyl acetate production. The company holds ISCC PLUS sustainability certification and received the ICIS 2023 Best Product Innovation Award in the small-to-medium enterprise category. At full capacity, the Peoria plant is expected to produce roughly 100 million pounds of ethyl acetate per year.

Why did Viridis Chemical file for bankruptcy?

The filing followed cost overruns, construction delays, and market distress in the ethyl acetate and ethanol spread associated with the relocation of its manufacturing plant from Nebraska to Peoria, Illinois. The initial construction budget was approximately $26.7 million, but costs escalated significantly — the company paid its general contractor $21.5 million in 2025 alone, with an additional $6.1 million in dispute. A critical dehydration system component ordered from India was delayed by tariffs and remains partially in a bonded warehouse in Houston. The ethyl acetate-ethanol price spread fell by approximately 26% in the second half of 2025. The company paused construction in December 2025 and was non-operational and generating no revenue at the time of filing.

Who is the claims agent for Viridis Chemical?

Epiq Corporate Restructuring serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What is the sale timeline?

The debtors propose an expedited section 363 sale process with a bid deadline of April 27, 2026, a potential auction on April 29, and a sale hearing on May 8, 2026.

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