NLC Energy Denmark Files for Chapter 11 Amidst $76 Million Debt and Punitive UC Contract

NLC Energy Denmark LLC, a renewable natural gas (RNG) producer, filed for prepackaged Chapter 11 bankruptcy protection on August 16, 2025, in the U.S. Bankruptcy Court for the Eastern District of Wisconsin. The filing aims to restructure approximately $76 million in secured debt and reject a long-term, underperforming biomethane supply contract with the University of California. The company cited persistent underproduction at its Denmark, Wisconsin facility and a burdensome contract as primary drivers for the financial distress.

The company's waste-to-RNG facility, designed to convert organic waste into pipeline-quality biomethane, has consistently underperformed projections since its expansion in 2017. This operational shortfall led to significant financial strain, with NLC Energy Denmark reportedly incurring losses of approximately $1 million per month, funded by its parent company. The firm's balance sheet reflects substantial liabilities, with assets valued between $50 million and $100 million against liabilities ranging from $100 million to $500 million.

A core issue contributing to the bankruptcy is a 20-year offtake agreement signed in 2016 with the University of California. According to the tweet from Bondoro, "The plant underproduced, the contract turned punitive, and intercompany support couldn’t close the gap." Court documents reveal that the contract includes a liquidated damages provision, which UCal estimates at $62.9 million as of July 31, 2025, a figure NLC Energy Denmark disputes, asserting actual damages are closer to $8.6 million.

As part of its prepackaged Chapter 11 plan, NLC Energy Denmark intends to reject the UCal agreement and restructure its senior secured notes. The plan proposes bifurcating the secured debt, with a portion becoming interest-only for 24 months and another accumulating interest until the facility is sold. The company plans to actively market the Denmark facility within two months of the plan's confirmation, aiming for an optimal sale price while continuing operations with its approximately 30 employees.