Big ethanol producer goes belly up

VeraSun Energy Corp., the nation's second largest ethanol producer accounting for about 13 percent of U.S. capacity, said late Friday it is seeking Chapter 11 bankruptcy protection after skyrocketing corn costs and a deterioration in capital markets left the company short on cash. VeraSun said it was working with lenders and expected to reach an agreement on additional financing to fund normal operations before a court hearing scheduled for Monday. The company said it plans to resume operations during the Chapter 11 proceedings, and it doesn't expect to reduce raw material purchases.

"Today's filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company's long-term future," Don Endres, VeraSun's chief executive, said in a statement.

VeraSun said it had significant losses in the third quarter due to a "dramatic spike" in the cost of corn it turns into fuel. The company also said the capital markets and a tightening of trade credit placed "severe constraints" on its liquidity.