At the company’s “first day” hearing, the US Bankruptcy Court entered an interim order allowing VeraSun and its affiliates to borrow up to $40 million from these DIP facilities and authorized the use of cash collateral to enable VeraSun to operate its business.

VeraSun is also in negotiations with its other lenders and expects to receive, when combined with commitments received from the 2012 noteholders and AgStar lenders, aggregate DIP financing commitments totaling $250 million.

Judge Brendan L. Shannon of the US Bankruptcy Court, District of Delaware in Wilmington also granted VeraSun’s emergency request to pay outstanding employee checks, to pay suppliers for post-petition goods and services and up to $20 million for goods delivered on or after 11 October 2008, and for other emergency relief.

The financing package approved today allows VeraSun to maintain operations and continue supplying its customers. The relief granted by the Court today will allow us to focus on our operations and, at the same time, provide VeraSun with the liquidity and ability to continue operations, which means producing ethanol and distillers grains, paying suppliers, and satisfying customer needs for product.

—Don Endres, VeraSun CEO

VeraSun and 24 of its subsidiaries filed for relief under chapter 11 of the US Bankruptcy Code in US Bankruptcy Court for the District of Delaware in Wilmington, on 31 October. The chapter 11 cases are being jointly administered as case number 08-12606.

Under bankruptcy law, the debtor in possession is the entity (person or corporation) which filed a bankruptcy petition, but which remains in possession of property upon which a creditor has a lien or similar security interest. DIP financing is special financing provided to companies in bankruptcy, and is usually more senior than debt, equity or other securities.