Aug. 13--TILTON -- More than a year ago, VeraSun Energy Corp. bought more than 700 acres of farmland southwest of Tilton as part of its plan to expand its production of ethanol, but now that land is being offered at auction as part of the company's Chapter 11 bankruptcy proceedings.

South Dakota-based VeraSun has been a leading producer of ethanol since 1999, operating several facilities throughout the Midwest. But last year, the company suffered significant losses, especially in the third quarter, and filed for Chapter 11 bankruptcy in October.

According to the company, the losses stemmed from a dramatic spike in corn costs, partly due to the company's corn procurement and hedging arrangements, and historically unfavorable margins.

A deteriorating capital market and tightening of credit further hurt, so VeraSun and its 24 subsidiaries filed bankruptcy, according to the company Web site.

In early 2008, VeraSun bought the 733 acres, at the west end of Ross Lane on Tilton's south side and adjacent to the CSX railroad line that cuts through the area. VeraSun also had secured an easement in 2008 that would have made it possible to build a rail spur to the CSX line. But VeraSun never developed the property, which has continued to be farmed.

A few years ago, VeraSun was one of a handful of companies and developers considering sites in Vermilion County for possible ethanol production. And Vermilion County was not alone as many ethanol projects were planned across the state, but most have died as the prospects for ethanol have changed.

More than a year ago, VeraSun was one of several very large ethanol projects in the area, said Vicki Haugen, president and CEO of Vermilion Advantage. But the ethanol industry turned upside down in a very short time. There were issues with whether ethanol would have the capacity to curb the nation's dependence on oil, and issues with the amount of water and natural gas used in production, according to Haugen.

But the 733 acres on Tilton's southern edge still remains a good site for economic development, Haugen said.

The acreage will be divided into six tracts ranging from approximately 35 acres to approximately 250 acres. Buyers can bid on separate tracts or the entire 733 acres.

If the site is sold in one chunk, that would make development easier, but Haugen said it will still be a viable economic development site that's near rail access and is within or close to Tilton's enterprise zone and tax increment financing district and will be regulated within the zoning system Tilton plans to implement.

"It has a lot of things going for it, and hopefully we can maximize on that in the near future," she said.

The auction will be at 6 p.m. Sept. 10 at the Beef House restaurant near Covington, Ind. Westchester Auctions of Champaign is partnering with Schrader Real Estate and Auction on the sale.

VeraSun had also bought 487 acres for future development near Litchfield in west central Illinois and 380 acres in Granite City, and both of those sites will be auctioned in a separate sale.

Since VeraSun filed bankruptcy last year, the company has continued operations and originally intended to reorganize, but in February, company officials announced it would sell off all assets through a court-approved sale process.

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