Despite a formal objection filed by farmers and corn grower organizations - including the South Dakota Corn Growers Association - a bankruptcy judge ruled last week that VeraSun Energy can renege on its corn contracts.

The Court approved VeraSun's request to reject certain corn contracts for delivery through January at the idled Welcome and Janesville, Minn., facilities.

VeraSun told the court because it does not expect to operate the production facilities located in Hankinson and several other facilities through January 15, 2009 and it intends to reject contracts for delivery of corn scheduled at these facilities during this period.

The U.S. Bankruptcy Court also granted final approval for debtor-in-possession financing totaling $196.6 million.

The financing will be used to fund operations at plants in Aurora, S.D., and other states, VeraSun said in a statement.

The Bankruptcy Court also issued final approval for a group of lenders led by AgStar Financial Services to provide a $24.5 million for VeraSun facilities located in Hankinson, N.D, and in three other states. The money will be used to maintain the production facilities in a safe and operable condition through Jan. 15, pending a more permanent financing arrangement.

The work force at these production facilities will be retained during this period, but VeraSun said it does not expect the facilities to produce ethanol until permanent financing is secured.

VeraSun said it continues efforts to secure long-term financing for its ethanol production facility in Marion, S.D.