Abengoa set out to build an $850 million facility for making cellulosic ethanol and an adjacent power plant in Hugoton, Kansas. The US Department of Energy entered into an “assistance agreement” in 2007 with the project and awarded it $95 million to be used toward construction. The department also made a $132.4 million loan guarantee in September 2011 of which $45 million was drawn and ultimately repaid.

Abengoa never finished construction of the project. Its project subsidiary, Abengoa Bioenergy Biomass of Kansas LLC, is in bankruptcy and filed a liquidation plan with the US bankruptcy court in Kansas in April. The project was sold last December to Synata Bio Inc. for $48.5 million. The government filed a claim as a creditor for a share of the sales proceeds. It says its money represented 27.4 percent of the $350.4 million that was spent on the project. Abengoa argues that the government was an equity investor rather than a creditor and says the assistance agreement lacks terms typical of a loan agreement, such as repayment terms, an outside maturity date, payment enforcement rights and an obligation to pay interest. 

A hearing is scheduled in the case for July 12.