Ouray’s troubled water-bottling plant has avoided a foreclosure sale by filing for federal bankruptcy protection, giving company officials time to seek financing to restart production of bottled water.
BIOTA Brands of America Inc. filed for Chapter 11 bankruptcy Tuesday, a day before an auction of the 3-year-old, $15 million bottling plant was scheduled.
The plant had been operating sporadically since the fall when it became embroiled in a dispute with the city of Ouray over the quality of its water supply. In early March, a receiver was appointed to take custody of the property because of $7.5 million in unpaid debt.
BIOTA president and chief executive David Zutler announced the bankruptcy filing Thursday that will hold off creditors while BIOTA seeks new financing with the help of a turnaround adviser.
“Everybody is just waiting for us to get back in production,” Zutler said.
BIOTA created the world’s first biodegradable bottle made of corn rather than oil. That has helped gain attention from environmental groups and the conservation-minded.
BIOTA has been bottling spring water that bubbles out of the mountains above Ouray under a contract with the city of Ouray. The water is piped to the bottling plant before it goes into the city’s chlorination system.
Ouray City Manager Patrick Rondinelli said city officials there still hope to see a successful operation at the bottling plant that promised new hope for a clean manufacturing base in this former mining town. He said the city is prepared to work with Zutler if he finds new financing or with a new owner if the plant should go back into receivership and be sold.
Rondinelli said an allegation by BIOTA that the city water was contaminated has been laid to rest by extensive testing. BIOTA also installed a new filtration system that exceeds standards set by a national bottled water association.
Staff writer Nancy Lofholm can be reached at 970-256-1957 or nlofholm@denverpost.com.
