The developer of a multi-data center project proposed for Surry County is reorganizing under bankruptcy protections.

Court records show Middleburg-based Green Energy Partners LLC filed for Chapter 11 bankruptcy last fall, listing over $3 million in unsecured claims from 10 creditors. On Feb. 20, U.S. Bankruptcy Court Judge Keith Phillips issued an order approving an “assignment and assumption” agreement to pay the debt.

Green Energy Partners announced in 2023 it had selected nearly 600 acres adjacent to Dominion Energy’s nuclear power plant for the construction of the “Surry Green Energy Center,” which the developer billed as a first-in-the-nation combination data center and hydrogen fuel hub powered by on-site small, modular nuclear reactors, or SMRs. In 2024, Surry supervisors voted 3-2 to approve the company’s application for “emerging technologies” zoning to construct 19 data centers spread across a 3-million-square-foot campus.

 

Will the project move forward?

Greg Davis, an attorney with the firm Kaufman & Canoles who represented Green Energy Partners during the rezoning process, told the Times the bankruptcy proceedings “involve a reorganization, not a liquidation of Green Energy Partners, which is alive and well and continuing work on the Surry Green Energy Center.”

Kaufman & Canoles is one of the creditors listed on Green Energy Partners’ Sept. 29 bankruptcy petition. The company owed the firm $3,180 as of that date.

“My client is optimistic that the center will be developed,” Davis said.

Board of Supervisors Chairman Robert Elliott, Vice Chairman Breyon Pierce, Surry District Supervisor Tim Calhoun and Bacon’s Castle District Supervisor Walter Hardy did not immediately return a Times’ request for comments. Dendron District Supervisor Amy Drewry, who’d joined Calhoun in voting against the project last year, said it was “not surprising for me to learn of the bankruptcy.”

“I voted against the project because the proffers were not legally stringent enough to protect the citizens and county,” Drewry told the Times. “One of the reasons that the proffers needed to be more stringent is because of what is currently happening. Too many times, Surry County makes decisions on verbal promises that are not legally enforceable, which is risky when a company goes out of business or is sold. It was my understanding that many of the data center land use decisions across the state were being requested by land developers, not the actual companies that would develop the sites.”

A Jan. 22 court filing by Green Energy Partners states the company had entered into a contract in 2022 to purchase the Surry acreage from Kirk Surry LLC and Kirk Trust Properties LLC for $12 million. Phillips’ order states that contract is to be assigned to a new company, Surry Green Energy Center LLC, with the sale price increasing 10% annually from Oct. 1 through the date of closing.

The Jan. 22 filing states $16 million of a $25 million assignment and assumption agreement will be used to “complete the purchase of the unimproved land” in Surry. The remaining funds will be used to satisfy the listed creditors and pay Green Energy Partners’ United States Trustee fees, with the balance “assigned to GEPVA,” an abbreviation for Green Energy Partners of VA LLC.

To resolve a separate lawsuit brought by Surry County landowner Cobham Bay Farms LLC, Green Energy Partners LLC entered into an out-of-court settlement last year in which Green Energy agreed to purchase an additional 248 acres opposite Hog Island Road from the original acreage, conditioned on the additional acreage receiving rezoning approval. According to the Jan. 22 filing, the Cobham settlement will be assigned to GEPVA.

Surry Green Energy Center LLC was organized Feb. 27, 2024, according to State Corporation Commission records. Green Energy Partners of VA was organized three days later.

Mark Andrews, who is listed as manager of Green Energy Partners LLC on its bankruptcy petition, is also named in SCC filings for Surry Green Energy Center LLC and Green Energy Partners of VA. An address corresponding to a private residence in Middleburg is listed as the principal office for both companies.

The same address is listed for JAAIT, another creditor with an unsecured claim of $2.1 million named in the Sept. 29 petition. It’s the largest single claim against Green Energy Partners.

Andrews did not immediately return a Times request for comments.

Renee Chapline, a consultant with Surry County’s Economic Development Department, said “from a zoning standpoint, this private project may proceed.”

“The county is aware that reorganization is being pursued by Green Energy, but the county is not a party and has not been involved in the bankruptcy court proceedings,” Chapline said. “As such, the county is not in a position to advise on impacts or interpret the bankruptcy court’s orders.”

“Chapter 11 bankruptcy gives the company the opportunity to reorganize while staying in business,” said Thomas Schneider, a finance professor formerly of Old Dominion University now with the University of Oklahoma. “Chapter 11 recognizes that the company has valuable projects that exceed the liquidation value of its assets, but those projects just aren’t payout (ready) quite yet. Alternatively, Chapter 7 would involve asset liquidation where the company and its projects would cease to exist. For the Surry project, Chapter 11 means that operations can likely continue, although funding terms may change.”

The Sept. 29 bankruptcy petition lists $16.6 million in total assets owned by Green Energy Partners LLC, exceeding the listed claims against the company.

“Bankruptcy is often more about liquidity than solvency,” Schneider said. “Even if leverage ratios, such as debt/assets, are healthy, the company might not be generating enough cash flow to service its debt. Selling assets like land to cover debt is feasible but not optimal if the company (has) productive uses for those assets. If a mechanic can generate $100 per hour using a $20 wrench, it doesn’t make sense to sell the wrench to cover a $5 debt. It’s better to wait until the shop opens so that the mechanic can work, and that’s exactly what Chapter 11 restructuring is designed to do.”

 

What was promised to Surry?

Davis, during the rezoning process for the original roughly 600 acres, described the data center and hydrogen hub project as a $6.45 billion investment in Surry over a 13-year buildout that by 2036 would bring more than 1,300 permanent jobs, half with six-figure salaries, to the largely rural county of 6,500 residents.

If built, it could drastically change the county’s economic outlook. Surry has seen stagnant and even declining population trends over the past few decades, coupled with a median household income lower than Virginia’s and the nation’s.

Green Energy Partners’ 2023 announcement had estimated 2,000 to 3,000 jobs, though company and county officials acknowledged last year that not all of those would be permanent, nor would the influx occur all at once. Most of the permanent positions, according to an economic impact analysis submitted with Green Energy’s rezoning application, would be tied either to the hydrogen plant or the operation of the three small, modular nuclear reactors that would power the site. That analysis estimated last year that the project would generate $74 million in annual tax revenue starting in 2036. It would amount to more than double the county’s current $69.8 million budget.

Green Energy proffered at the time of its rezoning approval to spend nearly $1 million on signage and roadway improvements along Route 10, Bacon’s Castle Trail and Hog Island Road.

Schneider said the fact that Green Energy Partners’ bankruptcy filing indicates far less than $6.45 billion in assets doesn’t mean it won’t be able to eventually make good on the promised investment.

“If they only have the land now, the majority of the investment will come after they break ground,” Schneider said. “Funding is typically allocated in stages. For instance, the money earmarked for laying a foundation is committed upfront, but it isn’t released until the required land is secured.”