The company began producing oil from corn germ for use in food and animal feed in the plant, at 22058 K-42, Merrill, in 2010.
Closure of the plant was not the outcome company officials had hoped for after filing for bankruptcy protection, said Dave Hoffman, president of the Plymouth Oil Board of Directors.
"The plan was to exit bankruptcy in August 2013," he said.
According to federal law, filing Chapter 11 bankruptcy allows companies to develop a plan to keep their business viable and pay creditors over time.
As part of its reorganization plan, the Plymouth Oil board had already raised $2.5 million in investments to help repay the about $8.5 million owed to lenders, Hoffman said.
In August the bankruptcy judge informed Plymouth Oil officials he was not going to accept the reorganization plan, Hoffman said.
"We were confident we would be approved, but we were not," he said.
The plant closed because investors had no assurance Plymouth Oil would survive, he said.
Hoffman said he thought the plant's assets would be turned over to the bridge lenders when the plant closed in August.
The bridge lenders are a group who loaned the dollars needed to complete construction of Plymouth Oil after the plant's largest investor dropped out.
When Plymouth Oil was unable to repay its debt, the bridge lenders foreclosed on the loan, Hoffman explained.
"Their loan was supposed to be short term and they want to get their money back," he said.
Those lenders filed a motion to turn the Plymouth Oil matter over to a state court, which has been done, Hoffman said.
The court recently appointed a receiver to oversee security of the plant while legalities are worked out, he said.
"The Plymouth Oil board is not involved with the plant at this time," Hoffman said.
Despite that, members continue to try to raise dollars to repay the company's debt, he said.
At the same time, Prairie Sun Organics, of Sioux Falls, S.D., is also working to raise dollars to purchase the assets of Plymouth Oil, Hoffman explained.
Prairie Sun would like to continue to operate Plymouth Oil at its Merrill location, he said.
"It's going to be two to three months before a decision on Plymouth Oil or Prairie Sun is made," Hoffman said.
Should Prairie Sun purchase the company, it may be possible for Plymouth Oil workers to be employed there because they know how to operate the plant, he said.
"We had a lot of really great employees," Hoffman said. "Most are still in the area."
Although possible, he does not expect Plymouth Oil to come out of bankruptcy, which means local investors will not see a return on their investment, Hoffman said.
"Some of them are going to reinvest with Prairie Sun and hope to recoup their losses," he said. "Some of them have already chosen to do that."