NLC Energy Denmark seeks to restructure massive obligations while disputing $63M liquidated damages claim from University of California
NLC Energy Denmark LLC, a Wisconsin-based biogas facility operator, filed for Chapter 11 bankruptcy protection on August 16, 2025, seeking to restructure approximately $76 million in senior secured debt against assets valued at just $10.3 million to $17.7 million, according to court documents filed in the U.S. Bankruptcy Court for the Eastern District of Wisconsin.
The Denmark, Wisconsin-based company pursued a prepackaged bankruptcy strategy, soliciting creditor votes before filing its petition in Case No. 25-24634. The debtor has requested a confirmation hearing for September 30, 2025, with ballot acceptance deadlines set for September 12, 2025.
Financial Crisis Stemming from Operational Failures
The bankruptcy filing caps years of financial distress for the biogas developer, which has been burning through approximately $1 million monthly in operating losses funded by its parent company, NLC Energy LLC. Chief Financial Officer Welles Hatch detailed in his declaration that the facility's biomethane production "drastically underperformed projections" following a $97.7 million expansion completed in 2017.
Originally formed in 2008 as NEW Organic Digestion LLC, the company operated a single anaerobic digester producing biomethane for electricity generation. A 2016 joint venture with NLC Energy aimed to expand operations but encountered immediate operational problems, including sewers backing up into residents' homes in a Nebraska facility, resulting in $1.8 million in legal settlements.
The Denmark facility, which processes farm manure and food waste into biomethane, shut down entirely in 2019 due to storage capacity issues but resumed operations under NLC Energy management by August 2020.
Major Dispute Over University of California Contract
A central issue in the bankruptcy involves a contentious biomethane supply contract with The Regents of the University of California, signed in 2016 based on production projections that proved unattainable. The contract includes a liquidated damages provision that UCal values at $62,914,798 as of July 31, 2025, while NLC Energy Denmark contends actual damages amount to only $8,592,833.
"The liquidated damages provision has no relationship to a reasonable estimate of UCal's damages for a breach of the UCal Contract, nor was that the intent," Hatch stated in his declaration. The provision expires on December 21, 2026, less than 16 months from the filing date.
The debtor plans to reject the UCal contract as part of its reorganization.
Reorganization Plan Details
Under the proposed plan, NLC Energy Denmark's senior secured debt will be restructured into two tranches: $20 million in Series A1 Notes paying 6.25% interest-only for 24 months, then amortizing over 15 years, and $55 million in Series A2 Notes that will accumulate interest until the facility is sold.
The ten Senior Secured Lenders, whose claims are secured by liens on all the debtor's assets, will retain their security interests while accepting the significant debt reduction. Wells Fargo Trust Company serves as collateral trustee for the lenders.
Trade creditors with claims under $250,000 will be paid in full and are unimpaired under the plan. General unsecured creditors totaling $95.6 million in claims will share pro-rata in a $500,000 distribution fund.
Active Asset Marketing Strategy
The reorganization plan includes provisions for actively marketing the Denmark facility within two months of plan confirmation, with Senior Secured Lender participation in the process. However, there is no mandated timeline for completing a sale, allowing management to pursue optimal pricing rather than a forced liquidation.
The company will continue operating during the marketing process, maintaining its 32-person workforce that processes organic waste into renewable natural gas and co-products. The facility's strategic location and existing infrastructure for biomethane production could attract buyers in the growing renewable energy sector.
Legal Representation and Case Timeline
Milwaukee-based Kerkman & Dunn represents NLC Energy Denmark as general bankruptcy counsel. The firm's Jerome R. Kerkman signed the disclosure statement and related filings.
EEC Property Holdings LLC, which owns 100% of the debtor's equity, will continue funding operations during the case, including payment of administrative expenses and ongoing operational shortfalls. The parent company has already advanced approximately $59.1 million to support the struggling operation.
The case represents a significant test of the renewable energy sector's ability to achieve projected returns on substantial capital investments, particularly in biogas operations dependent on complex supply contracts and operational performance metrics.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of multiple court filings in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.