EDUCATION

UW-Oshkosh plan to auction off Rosendale Biodigester approved, $2 million baseline set

Devi Shastri
Appleton Post-Crescent
The University of Wisconsin-Oshkosh Foundation is looking to sell its Rosendale Biodigester to pay off creditors as part of its Chapter 11 bankruptcy.

OSHKOSH - The University of Wisconsin-Oshkosh Foundation will auction off one of two biodigesters this month to pay off creditors as part of its Chapter 11 bankruptcy.

Fond du Lac County Circuit Judge Richard Nuss approved the Foundation's plan to sell its Rosendale Biodigester, which converts animal waste into energy, during an Aug. 27 auction, according to court documents.

In its initial request, filed July 12, the Foundation reported it had "serious negotiations with over five qualified purchasers" including a "stalking horse" bidder, Phibro Biodigestor LLC, which offered $2.1 million for the property.

A stalking horse bid is used by a debtor to assess the value of an asset before it is put out to auction, to make sure the sale begins at an appropriate rate.

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"We're encouraged by the interest in the Rosendale Biodigester and optimistic that a new owner will take it successfully forward," Foundation board Chairman Tim Mulloy said Tuesday in an email to USA TODAY NETWORK-Wisconsin.

The Foundation owed $6.1 million on the biodigester when it filed for bankruptcy in June 2016. Paul Swanson, the foundation's attorney, said that number remains at over $6 million today. However, the biodigester is not raising enough profits to pay off that debt, according to court documents.

It's unlikely the sale will meet the full amount the foundation owes, Swanson said.

"We believe that we're going to get the highest and best price for it, and we'll hopefully be able to do that," Swanson said. "The bank is all for it. It'll limit the damages."

First Business Bank of Madison is the primary lender for the biodigester, according to court documents.

The property is one of five foundation building projects the UW system and the state Department of Justice called into question during the tenure of former Chancellor Richard Wells and former Vice Chancellor Tom Sonnleitner. 

Wells and Sonnleitner signed "comfort letters" promising the university's support in making payments for the Best Western Premier Waterfront Hotel and Conference Center, the Oshkosh Sports Complex, biodigesters in Rosendale and on the UW-Oshkosh campus, and the Alumni Welcome and Conference Center.

In an ongoing lawsuit against Wells and Sonnleitner, the UW System says the "comfort letters" were illegal and that the two administrators also illegally transferred millions from the university to the foundation to support those projects.

State law allows the transfer of private foundation funds to the public university but not vice versa.

In April, the DOJ also filed felony charges against the two former university administrators.

The Foundation also is in the process of selling the former chancellor's residence, according to court documents. The Foundation paid $450,000 for the historic Alberta Kimball mansion when it purchased the home at 1423 Congress Ave. from Wells in January 2013 for $450,000 — nearly $120,000 more than its fair market value at the time, a USA TODAY NETWORK-Wisconsin investigation found.

A federal bankruptcy judge approved the sale in late-July for $340,000, and Swanson anticipates the deal will close sometime next month.