Biota Brands of America Inc., a pioneering maker of biodegradable water bottles, has shut down and filed for Chapter 11 bankruptcy.
Telluride, Colo.-based Biota became famous in green packaging circles for its bottles made from corn-based polylactic acid at its plant in Ouray, Colo. Biota water is sold at natural-food stores and gourmet supermarkets.
Biota used PLA from NatureWorks LLC. David Zutler, Biota's founder, chairman and chief executive officer, worked with NatureWorks and machinery makers Husky Injection Molding Systems Ltd. and SIG Corpoplast to commercialize the PLA water bottles.
Zutler, in a June 14 telephone interview, said several potential investors are interested in buying Biota and reopening the company. Zutler said he's looking for a buyer or a strategic partner who shares Biota's goals of green packaging.
``It's real simple,'' he said. ``We sought protection under Chapter 11 and we expect to recapitalize, re-energize and restart the company.''
Biota owes $8.8 million to UPS Capital Business Credit of Hartford, Conn., according to court records. UPS said it has not received a monthly payment since July 2005.
``Biota has been unable to operate its bottling plant or to sell the property so that it may pay UPS according to the terms of the note and loan agreement. Indeed, Biota's bottling business never got off the ground and never turned a profit,'' UPS said in court documents.
UPS Capital Business Credit launched a foreclosure action, but Biota filed for Chapter 11 protection from creditors April 17, the day before the Ouray plant was scheduled for a foreclosure sale. The company filed in U.S. Bankruptcy Court in Denver.
Biota listed about $10.5 million in liabilities and $5.3 million in assets.
Denver lawyer Risa Wolf-Smith, who represents UPS, has appraised Biota's equipment and real estate at about $5 million.
Snehal Desai, NatureWorks' global commercial director, said Biota was the Minnetonka, Minn.-based company's ``first highly visible consumer launch'' in North America.
``We wish them the best,'' he said.
Desai said PLA is a reliable material that is finding applications in packaging for juices, dairy products, edible oils and other products. Financial problems at Biota are not related to the biopolymer, he said.
``The issue is more clearly related to Biota itself than anything with NatureWorks' product,'' Desai said.
Officials of Husky and SIG did not return a telephone call seeking comment.
Although Biota is a small company, it has had a high profile. The company has been featured in cover stories in packaging magazines, and Biota's Web site has a photo section featuring politicians, musicians and actors posing with the water - and with Zutler.
The celebrities include Willie Nelson, Ed Begley Jr., Jewel, Dave Mason, Jimmy Buffett and Emmylou Harris.
In February, Biota water was served backstage at the Academy Awards ceremony - and in the limos that transported celebrities to the event. Shortly after that, in March, a court-appointed receiver shut the Biota factory down and laid off its employees.
The next court action will be June 28, when Bankruptcy Judge Sidney Brooks will hear a request by UPS Capital Business Credit to allow it to move ahead with the foreclosure, despite the Chapter 11 filing.