A bankrupt company's half-built ethanol plant near Carleton, a small town in Thayer County, is expected to be auctioned off in October, piece by piece.

Altra Nebraska LLC filed for Chapter 11 bankruptcy, earlier this month with more than $86 million in liabilities.

This is a plant that was planned at the turn of the century with high hopes among farmer-investors from the region.

Since then, California investors took over most of the company, $7 corn ruined the ethanol industry's progress temporarily and a lender has taken control of this particular example.

Now as oil prices continue rising and corn is at less than half the price of its peak, ethanol margins are better, plants that were on the edge are restoring profitability, closed plants are reopening and bankrupt ethanol companies are shaking out and being reorganized, said Steve Sorum, project manager of the Nebraska Ethanol Board.

"The climate is much better," Sorum said.

Attorney Bob Bothe of Omaha, representing the company that owns the Carleton plant and is operating as its debtor in possession, said he expects an auction will dispose of the plant and its equipment in October.

Maas Cos. Inc., of Minnesota has estimated the assets can sell for between 30 percent to 40 percent of the cost, according to bankruptcy documents.

Bothe had no estimate of the assets' value, but the petition in bankruptcy court lists them as between $10 million and $50 million.

Subject to a bankruptcy court hearing, the proposal is to dismantle the plant and sell it piece by piece, Bothe said.

"If we could sell it whole, we'd certainly look at it," Bothe said. "We've been unsuccessful in finding a buyer for it."

The company originally was organized as Oregon Trail Ethanol Coalition, a group of farmer/investors that started with a feasibility study in 2001. They tried to raise the money to build the plant themselves, but when the ethanol boom started in 2006, Altra Inc. of California bought out the farm investors, some of whom then became investors in Altra.

In October 2006, the company started construction on what was expected to be one of Nebraska's largest ethanol production plants, worth $220 million on 360 acres near Carleton.

Work stopped on the plant in November of 2007 due to the company's inability to obtain a long term construction loan, according to bankruptcy documents. The plant is about half done, the documents say.

As planned, the Carleton plant was expected to be operating by 2008 at a capacity of 110 million gallons per year, to create 50 new full-time jobs in the region, to use more than 36 million bushels of corn per year and to generate millions of dollars of economic activity in the surrounding communities.

But lenders foreclosed a lien and ended up owning the interest in Altra Nebraska, Bothe said.

"They were victims of the timing," Sorum said. "About the time they started, ethanol production had redoubled, construction costs went up and commodity prices went up. They got caught in that squeeze.

"It's taken the industry 18 months to work through that very expensive corn," Sorum said. "It was like a snake swallowing that big $7 dollar-a-bushel problem."

Bankruptcy documents show David Traversi of Healdsburg, Calif., is sole manager of Carleton Management LLC, which was hired to manage the bankrupt company. He declined comment.

The biggest creditors mostly fall into two camps, those who hold construction liens and the financing company, Fourth Third LLC of New York, owed more than $29 million.

Among the secured creditors with construction liens are contractors and subcontractors: Beatrice Concrete Co. Inc., owed $592,430; Bratney Cos. of Des Moines, $791,274; Aqua Plumbing and Heating of Crete, $186,347; Darland Construction, Omaha, $404,006; Delta-T Corp., Williamsburg, Va., $21.2 million; Gamma Power Systems LLC, Glastonbury, Conn., $23.8 million; Strobel Construction Unlimited, Clarks, Neb., $1.7 million.

The Thayer County Treasurer is owed $377,316.

Reach Richard Piersol at 473-7241 or at dpiersol@journalstar.com