Bioplastics manufacturer Danimer Scientific Holdings LLC has reached the end of its development, filing for Chapter 11 bankruptcy protection on March 18 with the bankruptcy court in Wilmington, Delaware, USA, and will immediately begin an orderly and value-maximizing wind-down of its business. Company representatives stated in court filings that they will also use the bankruptcy protection period to market all or most of its assets.
Danimer operates a polylactic acid (PLA) resin plant in Bainbridge, Georgia, with an annual capacity of up to 25 million pounds, and a polyhydroxyalkanoate (PHA) plant in Winchester, Kentucky, with an annual capacity of 55 million pounds, but its reporters were unable to reach company officials in Bainbridge for comment.
According to court documents, Danimer has assets worth $622.5 million and debts totaling $449.5 million, including $216.7 million in unsecured debt to Bank of America. The list of debts also includes companies such as Mitsubishi Chemical, BASF, and Total Corbion PLA.
In the first nine months of 2024, Danimer's sales were $26.5 million, a 26% decrease from the same period in 2023. The company reported a loss of $56.7 million over nine months, which was a reduction from the $94.6 million loss in the same period of the previous year. However, the company's stock price per share still plummeted from nearly $52 on March 20, 2024, to 35 cents in early trading on March 19, 2024.
Market veteran Connor Carlin believes that despite PHA's environmental benefits such as biodegradability in soil and marine environments, its technology still faces ongoing challenges including high production costs, limited scalability, and competition from low-cost fossil-based and bio-based polymers like PLA and bio-PET. Danimer's bankruptcy filing is not surprising. He also pointed out that the bankruptcy indicates the difficulty in achieving the required return on investment and scale to compete with existing companies, and choosing the path of going public poses many challenges, which has already caused significant losses to investors, making it even more difficult for the subsequent expansion of bioplastics.
Danimer produces PHA bioplastics under the trademark Nodax, with applications ranging from plastic tableware and straws to fibers. In 2021, Danimer acquired another bioplastics manufacturer, Novomer, for $152 million, and announced a $700 million expansion plan in Bainbridge.
On March 14, Danimer submitted a WARN notice stating that it would close its manufacturing plant in Bainbridge and lay off all 82 employees, with 40 layoffs occurring on that day. Company representatives stated in the notice that Danimer is facing an unprecedented liquidity shortage, with extremely low cash levels leading to the inability to pay certain existing debt obligations, impacting the ability to continue operations. Without significant changes, it is expected that operations, including those at the Bainbridge facility, will cease soon, and the closure is anticipated to be permanent.
Last December, the company secured short-term financing to buy time to find potential buyers, and since then has actively marketed itself and explored various transaction structures, but only received one letter of intent, which was conditional on confirming and initiating a key customer relationship to supply utensils for a large fast-food chain. However, the customer recently informed the company that it could not establish the relationship required by the third-party investor and also significantly reduced its forecasted order volume. Unable to find new investors, Danimer could not secure ongoing funding from lenders or the only identified third-party investor.
