US wood pellet producer Enviva's deadline for disclosing the long-term offtake contracts that it plans to ‘reject' under chapter 11 bankruptcy has been extended to 14 June from 26 April, the firm said today.
Enviva filed for chapter 11 protection on 12 March and announced details of a restructuring support agreement (RSA) on 13 March. This required the filing of a motion seeking rejection of customer contracts by 26 April.
The deadline was extended "by mutual agreement of the [RSA] parties", Enviva said.
Rejection of an agreement under the US Bankruptcy Code does not terminate the agreement, but "is treated as a breach of contract, and any damage claim arising from that breach is treated as if it arose immediately before the bankruptcy was filed", according to a research paper by US legal firm Troutman Pepper.
Enviva has only rejected one term contract so far, and this was approved by the bankruptcy court earlier this week.
The RSA also requires Enviva to have "entered into definitive documentation in respect of all renegotiated customer contracts" within 100 days of the 12 March petition date — or 20 June. This deadline can also be extended.
Enviva has been trying to renegotiate term offtake contract prices and terms with European and Japanese customers since last year.
