Aventine Renewable Energy, Inc v. Aberdeen Energy, LLC

Aventine bought ethanol from Glacial. In 2009, the parties executed “termination agreements” that required Aventine to pay Glacial $898,000 for ethanol received before the specified termination date and required Glacial to pay Aventine $1,250,000 for commissions it would have owed for marketing the ethanol that Aventine had agreed to buy. Glacial agreed to assume Aventine’s leases and began using 473 Union Tank railcars for transporting ethanol. When Aventine declared bankruptcy, Glacial owed it $1,600,000 for commissions and railcar leases; Aventine owed Glacial $900,000 for ethanol purchased from Glacial before the termination date. Glacial refused to pay Aventine anything, while continuing to use the railcars. Bypassing Aventine, Glacial made a deal with Union Tank, without securing a release of Aventine, as required by the termination agreements. Consequently, Aventine was required by its bankruptcy plan to settle the Union Tank debt, using $2.3 million worth of Aventine stock. After the bankruptcy, Aventine sued Glacial. The district court granted Glacial summary judgment, stating that while it would be “unjust” to allow Glacial “to avoid any liability” to Aventine, the latter’s failure to make payments doomed Aventine’s claims because “performance is an essential element of its claim for breach of contract.” The Seventh Circuit reversed, holding that it was error to place all the onus on Glacial, as both parties had defaulted. View "Aventine Renewable Energy, Inc v. Aberdeen Energy, LLC" on Justia Law